Cash Budget

CASH BUDGET

PRESENTED BY: AKANSHA JAISWAL ALAKCHCHENDR SINGH

MEANING OF CASH BUDGET Cash budget is a schedule to record cash inflows And outflows over a period with a view to locating the timing and magnitude of cash surplus and shortage.

Definition of cash budget A cash budget is a forecast of future cash receipts And cash disbursement over various intervals of time. James V. Home

Cash budget is an estimate of cash receipts and disbursement for a future period of time. Dougal

Guthman &

Importance of Cash Budget Cash is the nucleus or life blood in the working capital management.  Cash budget is a useful tool in the cash management of organizations as it reveals potential cash shortages as well as potential periods of excess cash.  It brings equilibrium between available cash and the cash demanding activities – operations, capital expenditures,etc. 

Advantages of Cash Budget 

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It ensures that sufficient cash is available when required. It reveals the expected shortages of cash, so that action may be taken in time,e.g.,a bank overdraft or loan may be arranged. It shows whether capital expenditure projects can be financed internally;or arrangement has to be made borrowings. It reveals the availability of cash so that advantage may be taken of cash discounts.

Methods of Cash Budget There are three methods usually used in preparation of cash budget. These Methods are: 

Receipts and payments Method.

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Adjusted Profit and Loss Method.

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Projected Balance Sheet Method.

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