Question

What are the three elements of a comprehensive budget?

Answer 1

Three component for comprehensive budget are as follows-

A. Profit and loss- profit and loss account will be providing for various revenues and cost which are related the company and it will be reflecting the overall expectation of the profit and loss of the company in the future so it will be providing a detailed structure about the income and expenses of the company. This will be a part of operating nature of the budget.

B. Cash flows forecast are another element of the comprehensive budget will be providing with the details of the cash flows related to a business and it will be accumulating all the cash flows with the business will be incoming and it will be also forecasting the related cash flows for the future and it will help the business in order to determine the liquidity in the budget so budgeting process will be providing for detailed statement about the cash position of the company.

C. Balance sheet of the company will be providing statement about the capital expenses and capital acquisition of the company and it will be reflecting all the Assets and the other long-term acquisition in company and it will also be reflected in the budget so this will be a part of the capital nature of the comprehensive budget.