Summary
Summary accounting - Budgeting
- Course
- Accounting
- Institution
- 11
3 page detailed summary of budgeting
[Show more]
Seller
Follow
Content preview
MODULE 10: BUDGETINGINTRODUCTION:
We budget to achieve maximum profits through planning and control.
Management formulates certain objectives for the business.
For effective and reliable forecasting a business must:
- Have reliable and representative records of past transactions.
- Consider external factors like economic conditions.
- Take into account internal logical assumptions and contractual obligations.
Internal factors to consider:
- Purchase of fixed assets.
- Purchase of stock.
- Sales and debtors collection period.
- Purchase and creditors payment period.
- Financing methods and sources.
CASH BUDGET OF SOLE TRADER:
Works with cash only
Cash budget focuses on the projected receipts and projected payments.
And the future inflows and outflows of cash.
Shows what the cash position of a business will be in the future (3 or 6 months)
Estimations are made using existing data to forecast the future.
Serves as a control measure.
Essential for effective planning.
If deviations occur, corrective action needs to take place.
Needs to take unexpected circumstances into account.
CASH BUDGET OF A TRADING BUSINESS:
Works with cash and credit.
Many businesses have a cash only business that has many advantages:
- Not burdened with interviewing debtors.
- Receives payment immediately.
- Less administrative work.
- Positive impact on working capital.
- Cash flow is improved.
- No possibility of bad debts
Encourage customers to pay with debit/credit cards:
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through EFT, credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying this summary from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller athenastuviastudyguides. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy this summary for R51,00. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
67474 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy summaries for 14 years now