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Cash Budget

Cash Budget represts the amount of estimated cash inflows, estimated cash outflow and deficits/surplus over a given budget period.

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Cash Budget

  1. 1. Cash Budget
  2. 2. Cash Budget represts the amount of estimated cash inflows, estimated cash outflow and deficits/surplus over a given budget period.
  3. 3. Basis of cash Budget Cash budget is based on- 1.Sales budget 2.Direct material purchase budget 3.Direct labour cost budget 4.Production overheads budget 5.Administrative cost budget 6.Selling & Distribution cost Budget
  4. 4. Importance of Cash Budget 1. It enables the management to determine the timing when there is likely to be a surplus/ shortage of cash. 2. It enables the management to determine the quantum of surplus/shortage of cash. 3. It enables the management to determine the period for which the situation of shortage / surplus is likely to be continued. 4. It enables the management to perpare the borrowinf schedule. 5. It enables the management to plan for financing a new project. 6. It enables the management to take advantage of cash discount.
  5. 5. Methods of preparation Two popular Methods of preparing cash Budget are: 1.Receipts and payment Methods 2.Adjusted Net Income Method
  6. 6. Methods of preparation Two popular Methods of preparing cash Budget are: 1.Receipts and payment Methods 2.Adjusted Net Income Method

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