Accounting in business

 The cash budget tallies the projected sources and uses of cash in an upcoming period. It clarifies whether company operations and other transactions will provide a adequate amount of money to meet probable cash necessities (Albrecht et al. 2008). The financial budget uses the results from the capital budget. The table above is an example of a cash budget for a newly developed business enterprise (Hansen et al 1989).

The example is a cash budget used to estimate the use of money for the first year. The company starts with an initial amount of $27,000 during the month of January. The company makes a total of $248,000 at the end of the month from cash sales, asset sales and other sources of money. In the month, the institution incurs expenses worth $195,000 from costs made in the production of products, the purchase of assets and also payment of labor. The organization has an overall cash balance of $53,000 in the month of January.

The net cash balance available at the end of January (53,000) becomes the beginning balance at the beginning of February (Burrow& Brad 2013). The company receives additional amounts from cash sales, and cash received that total up to $250,000. During the month of February, the company incurs expenses worth $282,000. The total costs exceed the total cash available at the end of the month of February by $32,000 ($250,000- $282,000= -$32,000). The surplus expenses arise from the dividends payment to the shareholders of the company. The negative net cash available gets carried on to the month of March. In the month of March, the institution has a total of $173,000 cash available at the end minus the surplus expenses for the month of February and the total expenditures of that month. At the end of March the institution has –$71,000 ($173,000- $32,000- $244,000). In the month of April, the company makes a total of $156, 000 however incurs costs worth $226,000 and the surplus $71,000 from the month of March. In total the company has a net cash balance of -$70,000.

In May, the institution makes a total of $161,000 and incurs a cost of $190,000. At the end of the month, the company has a net balance of -$29,000. The organization makes a total of $194,000 in the month of June and incurs costs worth $204, 000. The company has a net balance of -$39,000. In the month of July, the company makes a total of $201,000 and incurs a cost of $148,000. The institution recovers and has an additional $14,000. In August, the company has a net balance of $62,000. The institution has a net balance of $77,000 at the end of September. In the month of October, the enterprise makes a total of $221,000 and incurs $298,000. At the end of the month of October, the company has a net balance of $45,000. The enterprise has a net balance of $82,000 at the end of the month of November. In December, the company makes a total of 203,000 but incurs a total cost of $224,000 in production. The net balance of the company in December is $61,000($203,000+ $82,000- $224,000= $61,000). The enterprise has a net balance of $61,000 at the end of the first year.

References

Albrecht, W,  Stice, J, Stice, E,  Monte Swain,  2008 Accounting: Concepts and Applications Australia

Burrow, J& Brad Kleindl  2013, Business Management, United states

Don Hansen, Maryanne Mowen, Liming Guan 1989, Cost Management: Accounting and Control  Canada

P. C Jain, , The Economics of Public Finance, New Delhi

 Roy, L, Crum&  Goldberg, I, 1998  Restructuring and Managing the Enterprise in Transitio,  Washington.

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