Budgeting Flashcards
(14 cards)
What is the budgeting?
Process of preparing reports that estimate the financial consequences of future transaction.
What does budgeting assists decision-making?
- Comparing actual results to the budgeted results
- Identifying and explain for significance differences
- Improving the operation of business
What is cycle from budgeting?
- Prepare budgeted report
- Prepare actual report
- Prepare variance report (compare difference and examine reasons)
- Decision-making
What is the format of cash flow statement?
Business name: (Budgeted) Cash Flow Statement for period ending…
Operation
Net cash flow from operation
Investing activities
Net cash flow from investing activities
Financing activities
Net cash flow from financing activities
Net increase/decrease in cash held
Cash held at the start of the period
Cash held at the end of the period
What is operation activities?
Cash flow related to the firm’s daily trading activities.
What is investing activities?
Cash flow related to the noncurrent asset.
What is financing activities?
Cash flow that can affect or changes the firm’s financial structure.
How does budgeted cash flow statement assists your decision-making?
Avoid or Decide to…
- Level of drawings
- Purchasing NCA
- Loan repayments
- Advertising
- Capital contribution
- Prepaying expenses
- Increase sales
- Defer some expenses
What is the format of income statement?
Business name: (Budgeted) Income Statement for period ending…
Revenues
Less Sales Return
Less Cost of Goods Sold
Gross Profit
Add Inventory Gain
Less Inventory Loss/Write-Down
Adjusted Gross Profit
Add Other Revenues
Less Other Expenses
Net Profit/Loss
How does budgeted income statement assist your decision making?
Avoid or Decide to…
- Staffing levels
- Inventory mark-up
- Inventory level
- Improvement of staff performance
- Inventory management
- Advertising level
What is the difference between revenues and cash?
Profit is revenues earned less expenses incurred. Cash is cash held plus cash inflows less cash outflows.
What are the difference between income statement and cash flow statement?
Income Statement:
- Cost of Sales
- Discount Revenues
- Discount Expense
- Depreciation of a NCA
- Profit/loss on disposal of NCA
- Inventory gain/loss
Cash Flow Statement:
- Prepaid expense
- Unearned revenues
- Accrued revenues
- Accrued expenses
- Drawings
- Sale/purchase of NCA
- GST collected
- GST paid
- Bracket for outflow
What is the format for balance sheet?
Business name: (Budgeted) Balance Sheet as at…
Current Asset
Noncurrent Asset
Total Assets
Current Liabilities
Noncurrent Liabilities
Owner’s Equity
Total Equities
How does budgeted balance sheet assist your decision making?
Avoid or decide…
- Drawing levels
- Replacement for NCA
- Benchmark for liquidity and stability level
- Working Capital Ratio
- Debt Ratio
