CASH BUDGETING - SMALL BUSINESS MANAGEMENT

SMALL BUSINESS MANAGEMENT

Topic: Cash Budgeting

Like we promise yesterday, here is the cash budgeting for your perusal.  We will be bring you either Production Management, Management Accounting or Investment Analysis much more letter.  Have a nice day

QUESTION:

How does the cash budget help the small business owner plan and control operation? Indicate a description of this budget in your answer:

Solution

What is cash budget? It is an estimate of expected revenue expenditure with a specific period of time.  It takes account of projected receipts and disbursements – during a future period and shows the estimated closing balance at the end of a budget period.

IMPORTANCE OF CASH BUDGET TO THE SMALL BUSINESS OWNER

a.       It helps to estimate the cash requirement

b.      It helps to direct cash allocation

c.       It helps to maximize the use of human & material resources

d.      It assist in cash control

e.      It motivate the workers and owners to work towards set goals

f.        It enhance prudency

g.       It is a tool for performance evaluation

h.      It gives the business owner the idea of when to ask for cash

CASH BUDGET FORMAT

Description	Jan	Feb	March
REVENUE Opening Bal Cash from sales Loan Disposal of Asset TOTAL REVENUE	XX XX XX XX XX	XX XX XX XX XX	XX XX XX XX XX
PAYMENT Raw Materials Salaries/wages Insurance Maintenance TOTAL  PAYMENT	XX XX XX XX XX	XX XX XX XX XX	XX XX XX XX XX
Bal C/D (Revenue – Payment	XX

Note: We just want you to have idea of the format, but we promise to bring you the one solved with figure on it.