Question

can you help with the following?

Outline the key principles of cash flow and budgetary control?

thanks

Answer 1

Principles of budgetary control:

1. Develop a plan and establish a target of performance which coordinates all the activities of the business

2. Recording of actual performances

3. Comparing actual performance with planned performances.

4. Find out variances or differences between the planned and actual performance and also analyze the reasons for such variances or differences.

5. Suitable actions to be taken

Principles of cash flow:

1. Cash flow forecasting has to be realistic or at least pessimistic. Forecasting should also include potential pitfalls

2. Planning of multiple scenarios while forecasting cash flow as there are many unpredictable events may occur in future.

3. While forecasting cash flow it has include each and every item which is material

4. Categorizing of fixed costs and variable costs