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An overview of cash budgeting for merchandising firms, including the difference between a cash budget and a budgeted cash flow statement, the format of a cash budget, and the preparation process. It also covers the impact of GST on cash budgets and provides examples. By the end of this document, you will be able to prepare a detailed cash budget for a merchandising firm.
What you will learn
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Manage Budgets and Forecasts
MASTER BUDGETS
(chapter 1 : budgeting fundamentals)
Budget income statement
MERCHANDISING
PROFESSIONAL SERVICES*
Sales
Fees income
Sales
Purchases >>
COGS
Professional and supportlabour costs e.g. dentist + dentalassistant
COGS
Marketing expenses
Marketing expenses
Admin. expenses
Admin. expenses
Admin. expenses
Financial expenses
Financial expenses
Cash budget
Capital expenditure budget
Budgeted balance sheet
MANUFACTURING
Budget income statement
Production + Ending Inventories* direct materials (usage + purchases)* factory overhead Marketing expensesFinancial expenses
Is a cash budget and a budgeted cash flowstatement the same thing?
What does a cash budget provide us with anestimate of?
What does a cash budget look like?
How to approach a question in the exam whichasks you to prepare a cash budget.
The GST and cash budgets
Cash budgets - OVERVIEW
Some examples
Maintaining a desired cash balance
A budgeted cash flow statement is the estimated cash
flows for a future period presented in the specificformat required by AASB107 (i.e. the accountingstandard on Cash Flow Statements). A cash budget shows the estimated cash receipts, cash
payments and opening & closing cash balances for aspecific period.
Before moving on to the next slide, please refer to:
WEEK 4_FNSACC503A_Budgeting_LESSON
4_CASH BUDGETS_Format
Jot down the
of your cash budget.
It will help if you scan the question for clues onspecific items that will appear in the budget. STEP 2:
Work out both the
of
each cash receipt and payment (this step includespreparing a schedule of collections from AR /schedule of payments to AP if operating on credit). STEP 3: POPULATE
your budget with
the information you worked out in‘step 2’.
Before moving on to the next slide, please refer to:
WEEK 4_FNSACC503A_Budgeting_LESSON
4_CASH BUDGETS_GST Overview
Taxable supply
= good or service subject to GST
(i.e. not GST-free or input taxed)
e.g. books, computers, hot take-away meals.GST-free supply
= good or service not subject to GST, but
registered sellers can claim credits for GST paid oninputs
e.g. exports, education, child careInput taxed supply
= good or service not subject to GST
and the seller (whether registered or not) cannot claimcredits for GST paid on inputs
e.g. residential rents
The firm operates on a
cash basis
The firm operates on a
credit basis
The firm accounts for GST on a
cash basis
The firm accounts for GST on an
accrual basis
Before moving on to the next slide, please refer to:
WEEK 4_FNSACC503A_Budgeting_LESSON
4_CASH BUDGETS_Overview
Then refer to:
WEEK 4_FNSACC503A_Budgeting_LESSON
4_CASH BUDGETS_Four (4) Scenarios
Schedule of collections from debtors for the quarter ending 30 September
Month cash collected
Sales ($)
July
August
Sept
Total
Month of sale
TOTAL
CASH (30%)
CREDIT (70%)
$^
$^
$^
$
May
57,
17,
39,
7,
7,
June
63,
18,
44,
22,
8,
30,
July
72,
21,
50,
11,
25,
10,
46,
August
51,
15,
35,
8,
17,
25,
September
36,
10,
25,
5,
5,
Total collections
41,
42,
33,
117,
INFORMATION GIVEN: * 30% of sales are for cash; the remainder are on credit.* AR repayments as follows:M=25% (DIS.=10%); M+1 = 50%; M+2 = 20%* Bad debts estimated at 5%.
-^
In the table going ACROSS you have the period beingbudgeted for i.e. the BUDGETED PERIOD.
-^
In the table going DOWN you have the MONTH OFSALE.
-^
Tip:
Work DOWN and then ACROSS. For example, work
JULY: Total receivable: $50,400 x 25% = $12,600Less DISCOUNT ALLOWED: $12,600 x 10% = $1,260 = $11,340AUGUST: Total receivable: $50,400 x 50% (NO DISCOUNT) = $25,200SEPTEMBER: Total receivable: $50,400 x 20% (NO DISCOUNT) = $10,
Before moving on to the next slide, please refer to:
WEEK 4_FNSACC503A_Budgeting_LESSON 4_CASH BUDGETS_Schedule of Collection from
Debtors (THE COMPLETE PICTURE)