Get Cash Budget Format

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A cash budget is a company's estimation of cash inflows and outflows over a specific period of time, which can be weekly, monthly, quarterly, or annually. A company will use a cash budget to determine whether it has sufficient cash to continue operating over the given time frame.

The cash budget typically consists of four major sections: (1) receipts section, which is the beginning cash balance, cash collectionsfrom customers, and other receipts; (2) disbursement section comprised of all cash payments made by purpose; (3) cash surplus or deficit section showing the difference between cash ...

The cash budget starts with the beginning cash balance to which is added the cash inflows to get cash available. Cash outflows for the period are then subtracted to calculate the cash balance before financing. If this balance is below the company's required balance, the financing section shows the borrowings needed.

Before you can prepare a statement of cash flows, however, you'll need to prepare two other accounting documents, the income statement and the balance sheet.

A cash budget itemizes the projected sources and uses of cash in a future period. This budget is used to ascertain whether company operations and other activities will provide a sufficient amount of cash to meet projected cash requirements. If not, management must find additional funding sources.

For example, if the past experience shows that 20% sales are for cash and 80% sales are on credit and that the collection from debtors is made after two months, and if the total sales for the month of January are estimated at Rs. 5 lac, 20% i.e., Rs. 1 lac will be received in January and the balance Rs.

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Determine the time frame for cash flow. Estimate sales units. Estimate timing of income. Itemise and add expenditure. Calculate the surplus or deficit for each time period. Review sales units, timing of sales income and expenditure. Finalise the budget.

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