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Why you need to make budget?
Think of it this way...you have $200. About 1/4th of it is for housing, so that leaves you will $150. You need heat, air conditioning, lights, and water...subtract another $30. Now you have $120. You need to eat, right...Bang, $50 down the tubes. Which leaves $70. Got to get to work! More money...$25. Leaves $45. So $45 is all you got to play with. Entertainment, gifts, the whole rest of your life. How would you have known all this if you hadn't made a budget? A budget tells you how much money you can spend AFTER all the necessaries have been paid. Don't forget your retirement...five dollars in the savings account. So you have $40 out of that $200 that you started with. While the $200 sounds excellent...it doesn't sound so good after all the basics are covered. The Budget can keep you financially afloat in hard times.
What are the temporary capital accounts what are the advantages of having temporary capital accounts?
On the subject of accounting and money management, Temporary Capital Accounts are accounts like "expenses" and "revenue" that rest themselves at the end of each set term (let's say one year) so that a business can keep track of how much they spend and earn in one year. One of the major benefits of knowing this is so that you can project the future growth of your investment or business.
What percentage of current world leaders are men?
100%. The rest are at home, making sandwiches.
How do you prepare a sales budget for multiple products?
At its most basic level, a budget is a plan for owners and managers to achieve their goals for the company during a specific time period. Learn the fundamental concepts of cash budgets and to evaluate your budget on a month-to-month basis. What You Should Know Before Getting Started * Why Prepare a Cash Budget? How to Create a Cash Budget * Time Period * Desired Cash Position * Estimated Sales and Expenses * Blank Worksheet How to Analyze a Cash Budget Conclusion Checklist Resources What To ExpectThis Business Builder will introduce you to the fundamental concepts of cash budgets and outline the steps necessary for preparing a cash budget for your business. It will also show you how to evaluate your budget on a month-to-month basis. This Business Builder assumes that an income statement and a balance sheet have been prepared for your business. Information from these financial statements are an integral part of creating a budget. Without this information, this Business Builder may not be as helpful as it could be. What You Should Know Before Getting Started [top] At its most basic level, a budget is a plan. It is a plan for owners and managers to achieve their goals for the company during a specific time period. The preparation of a cash budget is an important management task. While some small businesses may be able to survive for a time without budgeting, savvy business owners will realize its importance. A cash budget can protect a company from being unprepared for seasonal fluctuations in cash flow or prepare a company to take advantage of unexpected quantity discounts from suppliers. While there are other types of budgets that can be prepared, such as projected or pro forma financial statements, a cash budget is a management plan for the most important factor of a company's viability its cash position. A company's cash position determines how suppliers will be paid, how a banker will respond to a loan request, how fast a company can grow, as well as directly influencing dividends, increases to owner's equity, and profitability. Many Small Businesses Find It Helpful To Prepare Monthly Cash Budgets And To Analyze Any Variances Between The Budgeted And Actual Amounts On A Monthly Basis. This enables small business owners and managers to stay on top of any unexpected cash uses. watch out forThe creation of a cash budget requires you to make estimates (or best guesses) about many different aspects of your company and the environment in which it operates. Future sales will be contingent on many things, not the least of which is competition, the local economic climate and your own internal operations and capacity. In addition, after sales are estimated, potential costs must also be derived. The important thing to keep in mind while arriving at these figures is that past experience is important, but so is intuition. The estimates you will need to develop must be based in reality and yet contain a dose of creativity and, if warranted, optimism. There are budgets, other than the cash budget, that are important for your company. However, the cash budget is a good first step if you are new to budgeting. Acash Budget Cannot Be Created In A Vacuum. Before and during the budgeting process, business owners must consult with line managers, suppliers, and key personnel to make the best guess possible about the relationship between the goals for the period and their effect on cash receipts and cash expenditures. Why Prepare A Cash Budget? A cash budget is important for a variety of reasons. For one, it allows you to make management decisions regarding your cash position (or cash reserve). Without the type of monitoring imposed by the budgeting process, you may be unaware of the cycle of cash through your business. At the end of a year or a business cycle, a series of monthly cash budgets will show you just how much cash is coming into your company and the way it is being used. Seasonal fluctuations will be made clear. A cash budget also allows you to evaluate and plan for your capital needs. The cash budget will help you assess whether there are periods during your operations cycle when you might need short-term borrowing. It will also help you assess any long-term borrowing needs. Basically, a cash budget is a planning tool for management decisions. How To Create A Cash Budget [top] There are three main components necessary for creating a cash budget. They are: * Time period * Desired cash position * Estimated sales and expenses Time Period The first decision to make when preparing a cash budget is to decide the period of time for which your budget will apply. That is, are you preparing a budget for the next three months, six months, twelve months or some other period? In this Business Builder, we will be preparing a 3-month budget. However, the instructions given are applicable to any time period you might select. Cash Position The amount of cash you wish to keep on hand will depend on the nature of your business, the predictability of accounts receivable and the probability of fast-happening opportunities (or unfortunate occurrences) that may require you to have a significant reserve of cash. You may want to consider your cash reserve in terms of a certain number of days' sales. Your budgeting process will help you to determine if, at the end of the period, you have an adequate cash reserve. Estimated Sales And Expenses The fundamental concept of a cash budget is estimating all future cash receipts and cash expenditures that will take place during the time period. The most important estimate you will make, however, is an estimate of sales. Once this is decided, the rest of the cash budget can fall into place. If an increase in sales of, for example, 10 percent, is desired and expected, various other accounts must be adjusted in your budget. Raw materials, inventory and the costs of goods sold must be revised to reflect the increase in sales. In addition, you must ask yourself if any additions need to be made to selling or general and administrative expenses, or can the increased sales be handled by current excess capacity? Also, how will the increase in sales affect payroll and overtime expenditures? Instead of increasing every expense item by 10 percent, serious consideration needs to be given to certain economies of scale that might develop. In other words, perhaps, a supplier offers a discount if you increase the quantities in which you buy a certain item or, perhaps, the increase in sales can be easily accommodated by the current sales force, all of these types of considerations must be taken into account before you start budgeting. Each type of expense (as shown on your income statement) must be evaluated for its potential to increase or decrease. Your estimates should be based on our experience running your business and on your goals for your business over the time frame for which the budget is being created. At a minimum, the following categories of expected cash receipts and expected cash payments should be considered: * Cash balance * ** Expected cash receipts: ** Cash sales ** Collections of accounts receivable ** Other income * Expected cash expenses: * ** Raw material (inventory) ** Payroll * Other direct expenses: * ** Advertising ** Selling expenses ** Administrative expense ** Plant and equipment expenditures ** Other payments Following Is A Description Of Each Line Item: cash balance. The cash balance is your cash on hand. This includes what is in your checking accounts, savings accounts, petty cash and any other cash accounts that you might have. cash sales. After arriving at a base figure of cash sales, it must be adjusted for any trade or other discounts and for possible returns. As stated previously, the base level of sales (and of accounts receivable) will be determined by the company's projections, goals and past experience. collections of accounts receivable. After a base level of accounts receivable is established (based on sales projections), it must be adjusted to reflect the amount that will actually be paid during the time period. Typical adjustments for a small business might be to assume that 90 percent of accounts receivable will be collected in the quarter in which the sales occur, 9 percent will be collected in the following quarter, and 1 percent will remain uncollectible. Of course, past experience will be the most reliable indicator for making these adjustments. other income. Your cash position may be affected positively by income other than that received from sales. Perhaps there are investments, dividends, or an expected borrowing that will be introducing cash to the company during the time period. These types of cash sources are referred to as "other income." Expected Cash Expenses: * Raw Materials (inventory). * For small business retailers and manufacturers, the largest cash expense is usually the amount spent for inventory or raw materials. Again, past experience will be your best indicator of future cash outlays. But don't forget to factor in any necessary increases to keep up with projected sales. You may also want to consult with your suppliers as to whether any pricing changes are expected. * Payroll. * Salaries are commonly the second largest expense item during an accounting period. Don't forget to include estimates for all appropriate local, state, and federal taxes. * Other Direct Expenses. * Use this line item for any additional expense that does not fit conveniently under the other headings. If you are making payments on a loan, include it here. * Advertising. * The role of advertising varies by type of business. If you are projecting an increase in sales, is there an accompanying marketing or advertising campaign? These costs must be budgeted. Include any expenses for print (brochures, mailers, and newspaper ads), radio, or other advertising services. * Selling Expenses. * Typical selling expenses include salaries and commissions for sales personnel and sales office expenses. However, this line item can also include any traveling or other sales-related expense not covered elsewhere. * Administrative Expenses. * General office expenses are included here. This will include your utilities, telephone, copying and day-to-day office expenses. Unless big changes are underway, past experience will guide you in evaluating future administrative expenses. * Plant And Equipment. * Cash payments for equipment loans, mortgages, repairs, or other upkeep should be included here. Past experience will, again, be your guide. * Other Payments. * If there are any cash payments you expect to make that are not covered in the above listing, include them here. (If they are repeatable, you may consider adding a separate line item.) However, typically, interest payments and taxes fall here. Here Is An Example Of A Cash Budget For A Small Business: SMALL BUSINESS CASH BUDGETFor the three months ending March 31, 200x ItemJan Feb March Beginning cash balance 15,000 -13,500 20,000 Expected Cash Receipts: Cash Sales 20,000 25,000 30,000 Collection of accounts receivable 45,000 55,000 70,000 Other income 0 0 5,000 Total cash collected 80,000 66,500 125,000 Expected cash payments: Raw materials (or inventory) 50,000 11,000 5,000 Payroll 10,400 10,400 10,400 Other direct expenses 2,000 2,000 2,000 Advertising 10,000 0 0 Selling expense 6,000 8,000 6,000 Administrative expense 4,500 4,500 4,500 Plant and equipment expenditures 10,000 10,000 10,000 Other payments 600 600 600 Total cash expenses 93,500 46,500 38,500 Cash surplus (or deficit) -13,500* 20,000* 86,500 * The ending cash balance becomes the beginning cash balance for the next period. Step 1: Create A Cash Budget For Your Company For A Three Month Period.How To Analyze A Cash Budget [top] The preparation of a cash budget is only the first step toward good financial management. The next step is to analyze to see how close the company is performing to expectations. Have any unexpected cash outflows occurred? If so, is the company's financial position seriously affected? A simple method for monitoring the cash budget is to prepare a budget-versus-actual report of actual and budgeted expenses every month. This type of report consists of three columns. The first column shows the budgeted amounts, the second column shows actual company performance, and the third column shows the difference in terms of a percent. Below is a sample month-end budget report for the fictional Turtle Company. Budget Versus Actual ReportFor May 200x Item Budget ActualVariance Cash balance 5,000 5,000 0% Cash Receipts: Cash sales 20,000 22,000 110% Collection of accounts receivable 15,000 13,500 90% Other income 0 0 Total cash 40,000 40,500 101% Cash payments: Raw materials (or inventory) 15,000 15,000 100% Payroll 7,200 9,400 130% Other direct expenses 500 500 100% Advertising 500 1,000 200% Selling expense 1,500 1,400 93% Administrative expense 500 500 100% Plant and equipment expenditures 5,000 7,500 150% Other payments 0 0 Total cash expenses 30,200 35,300 116% Cash surplus (or deficit) 9,800 5,200 53% As you can see, cash expenses for payroll, advertising and plant and equipment exceeded the budgeted amounts for the Turtle Company. But because the company analyzes these figures monthly, changes can be made before the increased expenses become unmanageable. The use of an budget vs. actual report allows owners to pinpoint how actual cash inflows and outflows vary from expectations and to make adjustments. Step 2: If The Data Is Available, Construct A Budgeted Versus Actual Report For Your Business. Conclusion [top] This Business Builder focuses on the creation of a cash budget for your business. While there are several other types of budgets that can be prepared, small business owners should pay close attention to their cash position and create a cash budget for their company. Preparing a monthly budget vs. actual report will give small business owners the information they need to make important decisions about the cash position of their company. Checklist [top] ___ When preparing your cash budget, did you remember to make the ending cash balance the beginning cash balance for the next period? ___ When estimating cash expenses, did you remember to factor any additional material, labor or other expenses for projected sales? ___ Is your sales goal for the period realistic? ___ Did you remember to adjust accounts receivable for possible uncollectible amounts? ___ Do expenditures for payroll include taxes?
Branch of accounting?
For information, accounting field could be divided into a few branches which is as follows:- i) Management Accounting ii)Financial Accounting iii) Taxation iv) Auditing Management Accounting is consider a future prediction on the business cost which will be useful for the management (internal users) to make their decision, projection, planning and control their business activity. The example of the M.A reporting consist of Sales Budget Report, Projection P & L for the year, Monthly Performance Review Report, etc. The format is not standardised from one business to another and it will be more depnding to the need and requirement of the company. Sought for better input from the rest...
What are the biggest problems California is facing with its budget?
The biggest budget problems in California seem to be the same ones the rest of the nation is facing. Some of the problems include the energy crisis, the fall of the revenue surge back in '99-00, and the stock market crash.
What is the most popular sport in the world by revenue?
soccer aka football(in Europe and the rest of the world)
How does Pituitary Dwarfism affect the rest of the family?
is there a treatment?
Why doesn't the Simpson gene affect Lisa?
It did affect her at first but then she started to know stuff and become smarter than the rest of the simpsons, and she matured when the rest of her family didn't (:
What percentage of PBS operating budget is from the federal gov't?
PBS gets about 15% of its budget from the Federal Gov't, specifically form the Corporation for Public Broadcasting. The rest is from donations and sponsorships.
How to start a budget and keep it?
To start a budget you have to determine what your monthly income and expenses are. Paying those off and distributing the remaining balance of your funds for food and emergencies will balance out the rest of your budget. Staying within the guidelines is not always easy. Not going beyond what you set aside for each item on your budget will help you to stay within the budget.
How do balanced forces affect an object that is at rest?
Not at all. The object is at rest only because the forces are balanced.
Which leader does a traveler probably have to thank for a rest area?
Rest areas along major highways are usually provided by the state, under a budget signed by the state governor.
How did the Korean War affect the rest of the world?
* chicken grits
IF A FAMILY IS IMMIGRANT IN A CERTAIN COUNTRY AND ONE OF THE FAMILY MEMBER WANTS TO GO BACK TO ORIGIN COUNTRY would that affect the rest of famil's residency?
No. It wouldn't affect the rest of family's residency.
How did the natural boundaries of china affect the relationship with the rest of the world?
barriers
How does klinefelters syndrome affect the rest of the family?
I don't know tell me the answer
