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CASH AND CASH FLOW - Coggle Diagram
CASH AND CASH FLOW
In order to prepare a cash budget, a number of estimated figures must be determined:
Sales and purchases
Wages and overheads
Exceptional receipts or payments
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Statement showing how cash was generated versus how it was spent for the time period (usually a year) just ended
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DIRECT METHOD
List actual receipts and payments the company receives or issues regarding to its operating activities during the accounting period.
Simpler, but requires companies to actually keep track of receipts and payments in cash.
Some companies lump up credit sales and cash sales, or credit purchase and cash purchase, thus unable to use this method
INDIRECT METHOD
Convert from Net Income of a company into various cash inflows and outflows from operating activities.
Useful for companies not bookkeeping cash receipts and payments of their operating activitie
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Working capital cycle: The period of time between:
_ The time cash is paid for raw materials
_The time cash is received for goods sold
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Due to different circumstances affecting results at different times of the year, days of the week etc.
In accounting, there are two basis:
Cash basis
Accrual basis
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Securities that are not cash equivalents.
Productive assets that are expected to benefit the firm for long periods of time
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A trend of a series of figures in a time series is the way in which the figures are moving in general despite various fluctuations caused by seasonality
