Importance Of Cash Budget
Cash budget means estimation of cash receipt and cash dibrusement during a future period of time. It also can be prepared for short and long term. Cash budget is an important tool for all business owner. Cash budget is review or projection of cash inflows and outflows .It can be used as a tool for analyzing the revenues and cost of a company or individual.
There have some importance of cash budgets.The important is controlling cash expenditure.Cash budget will predict the inflow and outflow of cash during the budget period. Next, cash budget can be influence of proposed expansion .It can protect a company from being unprepared for seasonal fluctuation in cash flow or prepare a company to take advantages of business situation .
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If deviation is positive then it is said that performance is good and if deviation is negative then it is said that the performance is bad or in worst .A cash budget makes provision for a minimum cash balance which will be available at all times. Cash budget will identifying investment opportunities which give more value to the firm than their cost.The value of the future cash flows need to greater than the investment required. It also estimating the size, timing and risk of future cash flow is the most challenging aspect of capital budgeting. The important of cash budget also maintenance of sample cash balance. Cash is the basis of liquidity of the enterprise. Cash budget help maintain the liquidty.It suggests adequate cash balance for expected requirements and for margin for the contingencies. A method of valuing inventories in which items sold or used are priced of the cost of ealiest acquistiong and those remaining are valued at the cost of most recent acquistions …show more content…
CWAC is used where different quantities of goods are purchased of different unit costs.Under this method ,weights are assigned to the cost price on the basis of the quantity of each item of each price .Under the weighted average inventory method ,one adds all the sale prices for each unit of each good and dividies by number of good available for
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