Categories: Financial Management

What is the Cash Budget? Meaning and Definition

What Do You Mean Cash Budget? A cash budget is a budget or plan of expected cash receipts and disbursements during the period. The cash budget is a written estimate of a firm’s future cash position. It predicts for some future period the cash receipts from different sources, cash disbursements for different purposes and the resulting cash position generally on a monthly basis as the budget period develops. Cash budget consists of all expected inflows of cash including income and non-income sources such as receipts from the sale of stocks and bonds and receipts from the sale of fixed assets. It is, thus, a formal presentation of-expected circular flow of cash through the business. So, what is the question; What is the Cash Budget? Meaning and Definition.

Here are explain What is the Cash Budget? with Meaning and Definition.

What is the meaning of Cash Budget? A cash budget is an estimated projection of the company’s cash position in the future. The cash budget depicts the movement of cash whereas the projected income statement presents account for all sources of income to be tapped and for all classes of expenses to be incurred during a stated period and show how much profit, if any, is expected to be earned in a future period.

Definition of Cash Budget:

A formal presentation of-expected circular flow of cash through the business. Likewise, cash budget provides for all types of cash outgo including payments of expenses accrued in the prior periods, the forecast period, or the subsequent periods (pre-payments) or as payments not immediately related to expenses such as the purchase of fixed assets or dividend distribution to the stockholders. Disbursements in respect of the purchase of fixed assets or dividend distribution would not find the place in the income statement. Similarly, there are certain items that would appear in the income statement but are not included in the cash budget.

A cash budget is defined as:

“Cash budget shows in detail budgeted cash receipts and payments of both capital and revenue nature. In addition, a cash budget also determines the expected cash balance of the organization business at specific intervals.”

The usual forecast period of a cash budget is one year broken down by monthly periods or weekly periods. This allows incorporation of seasonal variations in cash flow. When cash flows are relatively stable, the finance manager may prepare a budget for full one year period. When the outlook is very uncertain, he may have to be satisfied with a projection for only quarterly.

Wallet Cash; What is the Cash Budget? Meaning and Definition. Image credit from ilearnlot.com.
Nageshwar Das

Nageshwar Das, BBA graduation with Finance and Marketing specialization, and CEO, Web Developer, & Admin in ilearnlot.com.

Recent Posts

The Power Duo in Modern Hospitality: PMS + EMS

Modern Hospitality, Maximize hotel efficiency and guest satisfaction with the integration of Property Management Systems…

3 hours ago

Top Pre Employment Testing Companies to Consider

Enhance top companies is your recruitment strategy with pre-employment testing. Discover how standardized assessments improve…

7 hours ago

How Do Employment Test Impact Hiring Decisions?

Explore the significance of employment tests in personnel selection. Learn about their validity, reliability, and…

9 hours ago

What is the Interview in HRM?

The interview in HRM, it is a crucial method in the hiring process, serving as…

9 hours ago

One Way Video Interview Platforms and Tools

Revamp your hiring process with one way video interview platforms and tools. Discover the benefits,…

20 hours ago

What is a Learning Management System for Employee Training?

Discover how Learning Management Systems (LMS) optimize employee training and development. Explore core functionalities, strategic…

22 hours ago