Budgets

A cash budget is used to determine:

• profit

• cash closing balance

• the value of the business

• the debts of the business

A budgeted income statement can be used by the business to predict:

• profit

• expenses

• revenue

• all of the above

GST will appear on which budgeted statement?

• Income statement

• Cash budget

A business may prepare for a cash deficit by:

• reducing planned profits

• reducing planned cash payments

• reducing capital contributions

• increasing loan payments

Management's operating & financial plans for a specified period, including budged financial reports is expressed in:

• Cash Budget

• Master Budget

• Production Budget

• Sales Budget

Is dependent on sales targets & assists in planning, coordinating & control of production:

• Cash Budget

• Master Budget

• Production Budget

• Sales Budget

Managers use a budgeted income statement to predict:

• Competitor's performance

• Cash flow performance

• Accrual performance

• Stock market performance

Purpose of a budget is to:

• identify cash in and out flows of a business

• determine the actual cash on hand for a previous period

• identify revenue earned for the current period

• determine expenses incurred for the current period

Performance reports:

• analyse the variations between actual & expected outcomes of business activities

• are prepare d at the start of a budget period to predict business performance

• list all the cash in and out flows of a business over a period of time

• are published for external stakeholders to use to make informed decisions about the business.

What is one advantage of preparing a cash budget?

• Higher credit rating

• Knowing when cash my be idle & can therefore be invested

• It makes doing the business annual tax return quicker

• It is quick and easy to do