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Wednesday, 20 June 2012 17:08

 

Cash budget

 

The cash budget can be prepared by any of the following methods;
1. Receipts and payments method
2. The adjusted profit and loss method
3. The balance sheet method.

 

1. Receipts and payments method : In case of this method the cash receipts from various sources and the cash payments to various agencies are estimated. In the opening balance of cash , estimated cash receipts are added and From the total, the total of estimated cash payments are deduted to find out the closing balance.

2. The adjusted profit and loss method : In case of this method the cash budget is prepared on the basis of opening cash and bank balances, projected profit and loss account and the balances of the various assests and liabilities.

3. The balance sheet methos : With the helop of budget balances at the

end except cash and bank balances, a budgeted balance sheet can be prepared and the balancing figure would be the estimated closing cash/ bank balance.

Thus under this method, closing balances other than cash/bank will have to be found out first to be put in the budgeted balance sheet. This can be done by adjusting the anticipated.

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