Desribe cash budget

Question

Give a short introduction of the term ‘cash budget’? And also write down the dissimilar techniques to make it?

Answer 1

Cash budget is the budget that is made under the finance budget. It is an assessment of the predictable cash payments and cash receipts throughout the budget period. By making cash budget it becomes probable for the organization to forecast whether at any point of time there will be surplus or scarcity of cash. Two main points must be kept in mind before making cash budget: Time period of the cash budget and the items to be comprised in the cash budget.

Following techniques are employed to made cash budget:

- Payments and Receipts technique: This technique is helpful for short term assessments. Under this technique items must be categorized in two ways non operating Cash Flows and Operating Cash Flows
-Balance Sheet technique: This technique is helpful for long term assessments.
-Adjusted Losses or Profits technique: This technique is helpful for long term assessments.