Chapter 5 Flashcards
Principal, budget factor
The factor which limits what organisation can achieve. Invariably this will be sales. Once this budget is set the other budgets can then be calculated.
The steps involved in the preparation of the functional budgets
Step one - sales budget (PPF)
Step two- production budget
Set three - raw materials, labour, production,  overheads,
Step four - cost of sales budget, selling anticipation, cost, budget, and general and administration cost budget
Master budgets
Step, five - income statement
step, six cash budget (capital expenditure, budget)
Step 7 statement of financial position
Cash budget
A detailed budget of estimated cash, inflows and outflows, incorporating both revenue and capital items 
Action to take if a potential shortage in cash is identified
Organise an overdraft
Offer customer discount to pay early
Delay, paying suppliers
Raise other finance