P5: Describe how budgets can be Cash budget- Plans receipts and
used to set targets, to monitor and Budget is a financial plan that allows a payments. It is an estimation of cash
control organisations. business to set their financial targets. A inflows and outflows of a
budget is an agreed plan which is well business.These are often used to
known in either a numerical or financial assess whether the entity has sufficient
terms that covers a certain period of cash to fulfil regular operations.
Neil Patel time eg. one month or one a year.
40068068 There are different types of budget A business needs to have budgets
Unit 7 P5 methods such as: because it allows the business to have
a future plan which sets the business
Master budget- This the control of all financial targets. It also allows the
lower-level budgets produced by a business to have a clear
company's various functional areas, understanding of how the business will
and also includes budgeted financial use their resources so that they’re able
statements, a cash forecast, and a to achieve their aims and objectives.
financing plan. Budgets are set by businesses by
using past knowledge that they might
Sales budget- This is the first and have such as data and information
basic component of master budget and from previous years.
it shows the expected number of sales
units of a period and the expected
price per unit.
Production budget-This budget
calculates the number of units of
products that must be manufactured.
Budget
used to set targets, to monitor and Budget is a financial plan that allows a payments. It is an estimation of cash
control organisations. business to set their financial targets. A inflows and outflows of a
budget is an agreed plan which is well business.These are often used to
known in either a numerical or financial assess whether the entity has sufficient
terms that covers a certain period of cash to fulfil regular operations.
Neil Patel time eg. one month or one a year.
40068068 There are different types of budget A business needs to have budgets
Unit 7 P5 methods such as: because it allows the business to have
a future plan which sets the business
Master budget- This the control of all financial targets. It also allows the
lower-level budgets produced by a business to have a clear
company's various functional areas, understanding of how the business will
and also includes budgeted financial use their resources so that they’re able
statements, a cash forecast, and a to achieve their aims and objectives.
financing plan. Budgets are set by businesses by
using past knowledge that they might
Sales budget- This is the first and have such as data and information
basic component of master budget and from previous years.
it shows the expected number of sales
units of a period and the expected
price per unit.
Production budget-This budget
calculates the number of units of
products that must be manufactured.
Budget
