2D

GOING SOLO

CASH BUDGETS

Cash BudgetUnit 2D

A cash budget allows us to monitor cash flow

It shows future planned receipts and payments of cash

Here is an example of a cash budget: July Aug Sept Oct Nov Dec

Opening Balance

Add Receipts:

Sales

Total Receipts

Less Payments:

Purchases

Equipment

General Expenses

Total Payments

Closing Balance

1,000

15,500

8,500

3,800

500

15,000 15,000 14,000 14,000 13,000

8,000 8,000 7,000 7,000 6,000

- 15,000 - 15,000 -

500 500 500 500 500

16,500

12,800

3,700

3,700

18,700

8,500

10,200

10,200

25,200

23,500

1,700

1,700

15,700

7,500

8,200

8,200

22,200

22,500

300

300

12,700

6,500

6,200

Unit 2D Cash Budget

A cash budget is prepared to:

• make sure there is enough cash available

• monitor the timing of cash in and cash out

• see if and when a bank overdraft is required

• plan the timing of the purchase of a

fixed asset

Cash Budget

• avoid a negative cash flow situation