Budgeting:
• Shows what the business expects to take
place during a future period
• Important for planning and Internal Control
purposes
Includes:
• Forecasted amounts
• Projected amounts
• Predicted amounts
• Estimated amounts
• Expected amounts
• Deals with cash transaction of a business Receipts:
• Shows expected cash changes of a
business for a future period
• Cash sales
• Important to determine the liquidity of a
business • Receipts from debtors
• Liquidity – whether a business has • Sale on fixed assets
enough cash to pay for everything in a • Interest from investment
short term • Rent, commission, interest on fixed
deposit (Not amount earned but
amount received income)
Payments: • Commission income
• Invest in additional capital
• Cash purchases of trading stock • Loans received
• Payments to creditors • Fixed deposit when it matures
• Expenses (water, electricity, rent,
etc.)
• Purchase of fixed assets
• Loan repayments Never enter!
• Making investments
• Depreciation
• Owner drawings
• Discounts allowed and received
• Bad Debts
• Profit or loss on sale of an asset
, May June
Receipts
Cash Sales 15 000 21 000
Collections from debtors 6 000 5 000
Cash from sale of vehicle - 60 000
Rent income 5 000 4 000
Total Receipts 26 000 90 000
Payments
Cash purchases 12 000 15 000
Water 1 500 1 500
Payment to creditors 8 000 9 000
Drawings 500 500
Total Payments (22 000) (26 000)
Cash Surplus/Deficit 4 000 64 000
Cash Balance at beginning of period 2 000 6 000
Cash Balance at end of period 6 000 70 000
Receipts: Payments:
• All cash the business expects to • All cash the business expects to
receive pay
Cash Surplus/Deficit: Cash balance at beginning
of period:
• Difference between receipts
and payments
• Estimated cash balance on the
• Surplus – profit
first day of each month
• Deficit – loss
• Will be given to you
• receipts - payments
Cash balance at end of
period:
• Estimated cash balance on the
last day of each month
• Cash surplus/deficit + Cash
balance at beginning of period
• Shows what the business expects to take
place during a future period
• Important for planning and Internal Control
purposes
Includes:
• Forecasted amounts
• Projected amounts
• Predicted amounts
• Estimated amounts
• Expected amounts
• Deals with cash transaction of a business Receipts:
• Shows expected cash changes of a
business for a future period
• Cash sales
• Important to determine the liquidity of a
business • Receipts from debtors
• Liquidity – whether a business has • Sale on fixed assets
enough cash to pay for everything in a • Interest from investment
short term • Rent, commission, interest on fixed
deposit (Not amount earned but
amount received income)
Payments: • Commission income
• Invest in additional capital
• Cash purchases of trading stock • Loans received
• Payments to creditors • Fixed deposit when it matures
• Expenses (water, electricity, rent,
etc.)
• Purchase of fixed assets
• Loan repayments Never enter!
• Making investments
• Depreciation
• Owner drawings
• Discounts allowed and received
• Bad Debts
• Profit or loss on sale of an asset
, May June
Receipts
Cash Sales 15 000 21 000
Collections from debtors 6 000 5 000
Cash from sale of vehicle - 60 000
Rent income 5 000 4 000
Total Receipts 26 000 90 000
Payments
Cash purchases 12 000 15 000
Water 1 500 1 500
Payment to creditors 8 000 9 000
Drawings 500 500
Total Payments (22 000) (26 000)
Cash Surplus/Deficit 4 000 64 000
Cash Balance at beginning of period 2 000 6 000
Cash Balance at end of period 6 000 70 000
Receipts: Payments:
• All cash the business expects to • All cash the business expects to
receive pay
Cash Surplus/Deficit: Cash balance at beginning
of period:
• Difference between receipts
and payments
• Estimated cash balance on the
• Surplus – profit
first day of each month
• Deficit – loss
• Will be given to you
• receipts - payments
Cash balance at end of
period:
• Estimated cash balance on the
last day of each month
• Cash surplus/deficit + Cash
balance at beginning of period
