Accounting - Budgeting requirements

Budgeting requirements

When separating cash and profit it is important to recognise what is:

* a receipt but not revenue

* revenue but not a receipt

* a payment but not an expense

* an expense but not a payment

Reasons for having shorter budget periods include:

* to provide more accurate information in the budget for the business to
act on

* to better identify periods of cash shortage leading to decisions to
improve cash flow

* to better identify cash surplus maximising the return on excess funds

* to enable quicker reaction to previously unforeseen events

* to have better planning and control as a response to reviews of the
budget with actual results

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