Budgets
Budget : The formal future plans (in written form) and actions of a business in quantitative
terms (expressed in
Figures
A cash budget shows the expected inflow and expected outflow of cash. The cash budget
the
reflects the expected balance in the bank during budget period .
bank balance + Total Receipts
Opening Total Payments =
Closing bank balance.
-
Cash Budget ofa Sole Trader (cash only won't include in cash Budget:
-
depreciation
for Bad debt
provision
-
·
A cash budget Focuses on the projected Bad debts
payments
-
, - discount received/allowed
i.e the future inflows and outflows of cash Trading stock surplus/deficit
-
.
I I Il
-H
I
Cincome)
RECEIPTS March April May TOTAL
-
Cash sales
Rent Income
Commision income
old equipment sold
Total Receipts [A]
-
PAYMENTS (expenses
Cash
purchases of Trading Stock
Salaries
Cash
drawings (drawings
Sundry other expenses
Band repayment
New equipment
Deposit on Vehicle/equipment
instalment on Vehicle
Total [B]
Payments
Cash Surplus (shortfall [A -
B]
Bank:
opening balance
, Cash Budget of a trading business (cash and Credit
Advantages of a 'cash only' policy :
-
trader not burden with screening/interviewing debtors
receives
payment immediately
-
less admin work
-
positive impact on working Capital
-
cash flow position of business is improved
-
* credit transaction will affect the cash is received #
only budget when the cash receipt
Debtors Collection Schedule is drawn up to record the expected collections from Debtors.
Debtors collection policy :
-
must within 30 days
pay
>
-
To make people payon time :
-
offer discounts
-
proper background check on debtor
charge intereston late payments
-
give people higher discount for paying with cash
-
deptors get a limit on their
purchases
-
.
Budget : The formal future plans (in written form) and actions of a business in quantitative
terms (expressed in
Figures
A cash budget shows the expected inflow and expected outflow of cash. The cash budget
the
reflects the expected balance in the bank during budget period .
bank balance + Total Receipts
Opening Total Payments =
Closing bank balance.
-
Cash Budget ofa Sole Trader (cash only won't include in cash Budget:
-
depreciation
for Bad debt
provision
-
·
A cash budget Focuses on the projected Bad debts
payments
-
, - discount received/allowed
i.e the future inflows and outflows of cash Trading stock surplus/deficit
-
.
I I Il
-H
I
Cincome)
RECEIPTS March April May TOTAL
-
Cash sales
Rent Income
Commision income
old equipment sold
Total Receipts [A]
-
PAYMENTS (expenses
Cash
purchases of Trading Stock
Salaries
Cash
drawings (drawings
Sundry other expenses
Band repayment
New equipment
Deposit on Vehicle/equipment
instalment on Vehicle
Total [B]
Payments
Cash Surplus (shortfall [A -
B]
Bank:
opening balance
, Cash Budget of a trading business (cash and Credit
Advantages of a 'cash only' policy :
-
trader not burden with screening/interviewing debtors
receives
payment immediately
-
less admin work
-
positive impact on working Capital
-
cash flow position of business is improved
-
* credit transaction will affect the cash is received #
only budget when the cash receipt
Debtors Collection Schedule is drawn up to record the expected collections from Debtors.
Debtors collection policy :
-
must within 30 days
pay
>
-
To make people payon time :
-
offer discounts
-
proper background check on debtor
charge intereston late payments
-
give people higher discount for paying with cash
-
deptors get a limit on their
purchases
-
.
