IAL edexcel business UNIT 1

• A budget is a financial plan which shows how much income will be received, what expenses need to be paid and any surplus cash left over at the end of the period.
• The secondary function is to ensure that there are sufficient funds available to invest in new projects or opportunities.
• The secondary function is to ensure that there are sufficient funds available to invest in new projects or opportunities.
• The primary function is to make sure that the company has enough money to pay its bills
• The primary function is to make sure that the company has enough money to pay its bills
• The main purpose of a budget is to ensure that an organisation has enough money coming in to cover all its costs
• The tertiary function is to make sure that all legal requirements regarding taxation and other statutory obligations are met.
• There are two types of budgeting - static and flexible
• The primary function is to manage the day-to-day running of the organisation
• Budgets are used by organisations to control their finances and make sure they have enough money to pay for everything they want or need to do
• Cash flow forecasting involves estimating future inflows and outflows of cash from operating activities, investment activities and financing activities
• Budgets can also be used as a tool to control spending by setting limits on expenditure
• Operational activities include day-to-day running costs such as wages, rent, utilities etc.
• A budget is a financial plan which shows how much income and expenditure a business expects over a period of time, usually one year.
• Static budgeting assumes that sales will remain constant throughout the period, while flexible budgeting allows for changes in sales levels.
• A static budget assumes that sales will remain constant throughout the period, whereas a flexible budget allows for changes in sales levels
• A cash flow forecast predicts how much cash a business expects to receive and spend over a specific time period.
• Cash flow forecasts can be used to identify potential problems with cash flow and take action to address them.
• Static Budget = Fixed Costs + (Variable Costs x Sales)
• A budget is a financial plan which shows how much income (revenue) a business expects to receive, and what it plans to spend this on over a set period of time
• Flexible Budget = Fixed Costs + (Variable Costs x Actual Sales)
• Static budgets assume that sales will remain constant throughout the year
• Flexible budgets take into account changes in sales levels during the year
• A cash flow forecast predicts how much cash will come into an organisation (inflows) and go out of it (outflows)
• A cash flow statement shows how much cash came into the business during a particular period (cash inflow) and how much went out (cash outflow)
• Opportunity cost = value of next best alternative
• Static budgets assume that sales levels remain constant throughout the period covered by the budget