Chapter 5 Flashcards

1
Q

Principal, budget factor

A

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.

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2
Q

The steps involved in the preparation of the functional budgets

A

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

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3
Q

Cash budget

A

A detailed budget of estimated cash, inflows and outflows, incorporating both revenue and capital items 

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4
Q

Action to take if a potential shortage in cash is identified

A

Organise an overdraft

Offer customer discount to pay early

Delay, paying suppliers

Raise other finance

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