Implementation of budget

The implementation of budget is the responsibility of the budget director. The success of the entire exercise of budgeting depends on two important factors.

First, proper and clear communication to all key people involved in the implementation of the budget. They should clearly know what is expected of them and how to achieve the goals.


Second, the co-operation and encouragement by the top management in achieving the targets as identified in the budgets. The top management should be willing to reward people who meet budget goals.

Ideally, top management and the lower level of management should work together to prepare and implement the budget successfully.

Example

Budgeted statement of cash receipts and cash disbursements for the XYZ Company for the year ended 30th June 20×1.

TotalFirst QuarterSecond QuarterThird QuarterFourth Quarter
Opening cash balance85,00020,00015,00030,00020,000
Cash receipts60,00015,0006,00026,00013,000
Total Cash Available1,45,00035,00021,00056,00033,000
Cash Disbursements:
Inventory25,0005,0006,0009,0005,000
Assets Purchase60,00030,00015,0005,00010,000
Operating Expenses15,0005,0005,0002,5002,500
Total1,00,00040,00026,00016,50017,500
Disbursements:
Minimum Cash Balance Required20,0005,0005,0005,0005,000
Total Cash Needed1,20,00045,00031,00021,50022,500
Excess of Cash available over Cash Disbursements25,000(10,000)(10,000)34,50010,500
Also Check:  Discretionary budget

 

 

Budgeted Balance Sheet, 30th June 20×1
Current Assets
Cash$25,000
Accounts Receivable10,000
Inventory20,000
Fixed Assets
Land30,000
Total85,000
Liabilities and owner’s equity
Current Liabilities
Accounts payable20,000
Accrued expenses5,000
Owner’s equity40,000
Reserves and Surplus20,000
85,000

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top