22) Cash Budgeting Flashcards
1
Q
Why are cash budgets important?
A
So business can insure it can:
pay wages
Monitor spending efficiently
Pay bills
2
Q
Why do cash flow issues occur?
A
When a business has insufficient cash to cover its day to day expenditure it has cash flow problems which can be caused by:
Goods being sold on credit
Money in is less than money out
Paying to much to suppliers for goods
3
Q
How to solve cash flow issues?
A
Raising additional capital Taking out loans Tight credit control -(collecting money owed as quickly as possible) Delay making payments Efficient stock control
4
Q
Advantages of preparing a cash budget
A
Finances are better controlled
Money is spent wisely
See where cash flow problem will arose and sort them quickly
Decisions about when to purchase things such as new equipment
5
Q
What is a cash budget?
A
A plan of how much money you have and how you will spend it
