Question

What is in a cash budget statement? I have a small soap company and have to do a cash budget statement, although I don't know what a small business cash budget would look like. I have all the info just need help with a template and what accounts. I don't have dividends or debts, it's a new small made-up business.

Answer 1

Cash budget: The cash budget refers to the estimation of the future cash inflow and outflows for a specific period of time. It includes the cash receipts and cash payments for a specific period. The cash budget is used to determine whether the business has sufficient cash to carry out its operating activities. It shows the change in cash during a period of time and the use and application of cash.

Cash budget template:

The cash budget has four main items:

• Opening cash balance
• Cash receipts
• Cash payments
• Cash surplus/deficit
• Closing cash balance

The base item in the cash budget is the opening cash balance. It is the cash available at the beginning of a specific period.

The cash receipt consist of the items that would increase the cash balance i.e. cash sales, collection from debtors, sale of assets, capital invested by the owner etc.

The cash payments includes the items that would decrease the cash balance such as payment for goods purchased, payment to workers, rent payment, electricity payment etc.

The cash payments are subtracted from the cash receipts to calculate the cash surplus/deficit.

The cash surplus/deficit is added/subtracted in the opening cash balance to calculate the closing cash balance.

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