Week 1-2 cash budgets Flashcards
What is accounting?
It is about the information needed to run a business or organisation. Because of this, they will need to be able to interpret the financial and non-financial information properly.
Or
It’s the recording and communicating of financial information for both internal and external users
What us capital?
The amount the business or business owner has invested in a business
What are drawings?
The or a amount taken out of a business for the owners personal use.
What is meant by the entity concept?
The entity concept recognizes that the transactions of its owner. This principle should be followed even if the business is not a separated legal entity
What is meant by financial accounting?
Financial accounting is the provision of financial information to external users
What is meant by Purchases?
These are the costs incurred by the business or organisation in buying the goods it plans to sell to its customers. A purchase is made when the goods or services are received from the supplier.
What are sales?
Sales are the income earned from selling goods or services. A sale is made when the goods or services are invoiced to the customer, which is usually at the point the goods or services are delivered to the customer.
What are expenses?
These are costs incurred by the business or organisation to enable the business or organisation to trade or conduct their services
What is meant by “balance brought forward”
Is this the balance at the beginning of the period.
What is meant by “balance carried forward”?
This is the balance at the end of the period
What is a cash budget?
It is a forecast of all the cash receipts and payments that the organisation expects to make.
It is also a tool for identifying cash shortfalls or surpluses so that managers can make decisions about arranging financing for future needs or investing surplus cash.
What are cash sales?
Cash sales are made when the cash is received at the same time as the goods or services delivered
What are cash purchases?
Cash purchases are those purchases for which cash payment will be received at the same time as the goods or services received.
What are credit sales?
Credit sales are made when the cash is received at the same time as the goods or services delivered
What are credit purchases?
These are purchases where the goods or services have been received by the business but for which payment is made at a date after the goods of services have been delivered
