Budgeting

Question 1

What is Budgeting

Answer 1

Budgeting is the process of creating a plan on how you are going to spend your money. Budgeting allows you to look at the future and decide if you have enough money
A budget provides future forecasts and other financial data allowing business owners to obtain finances if needed

Question 2

Strategic Planning

Answer 2

Long term planning (3-5 years)

Question 3

Usefulness of budgets

Answer 3

Budgets can assist in decision making such as

Inventory levels
Identifying periods of cash shortages or cash surpluses
Helps making short term decisions
Sets targets

Budgets can be monthly, annually or quarterly

Question 4

Operating Budgets

Answer 4

Sales Budgets
Shows sales revenue per period
The amount of inventory sold
Cash from sales

Operating Expenses Budgets

Question 5

Financial Budgets

Answer 5

Cash Budgets
Budgeted Financial
Capital Expenditure Budget

Question 6

Improving Cash Inflow

Answer 6

Collect cash from customers as soon as possible
Improve sales revenue
Make wise inventory purchases
External finance

Question 7

Cash Outflow

Answer 7

Cut down Expenses
Paying suppliers as late as possible without incurring penalties
Keeping inventory levels to only what is needed
Defer Capital expenditure