Discuss why small businesses might not choose to extensively engage in the budget process. Also discuss the various benefits of budgeting and state whether it is likely that a small business can reach their goals without engaging in some kind of budget process.

Discuss why small businesses might not choose to extensively engage in the budget process. Also discuss the various benefits of budgeting and state whether it is likely that a small business can reach their goals without engaging in some kind of budget process.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter7: Budgeting

Section: Chapter Questions

Problem 6MC: Which of the following is true in a bottom-up budgeting approach? Every expense needs to be...

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Concept explainers

Cash budget

A cash budget is an estimate of an organization's cash flow for the future period. A cash budget forecasts future cash receipts and payments from various sources for a fiscal year. A cash budget can be created once a month or once a week to determine the organization's cash position and ensure its performance in relation to the budget. It aids in determining whether the company has enough cash and cash equivalents to meet its operational needs in the future. If cash receipts are insufficient to cover future expenses, an organization may plan to obtain funds from other sources. After estimating the sales, purchase, and capital expenditure budgets for the year, management develops a cash budget. These budgets are created to ensure that an organization's cash flow is managed. It is important to note that only cash transactions are recorded when actual cash enters and exits an organization.

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