Question

What is the primary elements of a cash budget. Include what you would expect to find on a cash budget and how a cash budget can assist in the management of cash for a business.

Answer 1

There are generally three primary components of a cash budget-

1. Receipt section of the cash budget will be reflecting all the receipts have been received by the company in the form of the cash. Receipt section of the cash budget will be reflecting the inflows of cash

2.: Cash disbursement will be reflecting all such cash outflows statement made by the company in form of the cash and it will be reflecting all the release of cash out of the company.

3.cash surplus & cash deficit will be reflecting the position of the company in a particular period in form of net cash sent this net cash would be cash surplus or cash deficit.

4. financing section of the cash budget will be reflecting all the cash investment which shall be made by the company during a specified period of time and it will be reflecting the long-term benefits generated out of this projects.

I will be expecting to find out various kinds of receipts in form of cash by the company and I will also expect to find out the outflows had been generated by the company and the investments which has been made by the company

Cash budget will be helping the management as it will be trying to compare the actual with the standard and it will be trying to also reflect the ability of the company to remain liquid over a longer period of time.