Poa - Use of Budgets in a Business

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Monthly Cash Budget|
 | February| March| April|
Receipts:| | |  |
Cash Sales| $ 636,000 | $ 614,000 | $ 556,000 | Credit Sales| $ 4,195,913 | $ 4,038,450 | $ 3,863,200 |  | $ 4,831,913 | $ 4,652,450 | $ 4,419,200 | Payments:| | |  |

Salaries and Wages| $ 874,000 | $ 916,000 | $ 956,000 | Purcahse for resale| $ 2,820,000 | $ 2,620,000 | $ 1,980,000 | Overhead expenses| $ 595,000 | $ 545,000 | $ 565,000 | Purchase of new vans| $ - | $ - | $ 150,000 | Taxation| $ - | $ 156,000 | $ - |  | $ 4,289,000 | $ 4,237,000 | $ 3,651,000 |  | | |  |

Net Cash Flow| $ 542,913 | $ 415,450 | $ 768,200 | Opening Cash | $ 268,000 | $ 810,913 | $ 1,226,363 | Closing Cash| $ 810,913 | $ 1,226,363 | $ 1,994,563 |

“Management of any business will be ineffective without the preparation and use of budgets.” I agree with this statement to a certain extent. Firstly, a budget is an organisation’s forecasted plan for the upcoming period or future years that will be expressed in monetary terms. It includes planned revenues, expenses, assets, liabilities and cash flows. It also helps the organisation to control its finances and enable the management to make confident financial decisions and meet his objectives in the long run. Budgeting can be the most effective way to control...
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