Budgets Matrix

CheckPoint: Budgets Matrix

Use Appendix C to define each of the types of budgets listed and describe their uses.
Post Appendix C as an attachment.

Axia College Material

Appendix C

Budgets Matrix

Directions: Using the matrix, define each of the budgets listed and briefly describe its uses.

Budget	Definition	Describe its uses
Sales budget	The sales budget is derived from the sales forecast. It is management’s best estimate of sales revenue for the budget period. An inaccurate sales budget can adversely affect net income. Each of the other budgets depends on the sales budget.	A sales budget is used to forecast anticipated sales volumes
Production budget	The production budget shows the units that must be produced to meet anticipated sales.	A production budget is used to determine the number of units that has to be produced to meet predicted sales and inventory requirements
Direct materials budget	The direct materials budget shows both the quantity and cost of direct materials to be purchased.	A direct materials budget is used to estimate the amount of raw materials that need to be purchased during a specific period of time.
Direct labor budget	The direct labor budget contains the quantity or hours and cost of direct labor necessary to meet production requirements.	A direct labor budget is used to determine how many labor hours are needed to meet the expected production volume during a specific period of time.
Manufacturing overhead budget	The manufacturing overhead budget shows the expected manufacturing overhead costs for the budget period.	A manufacturing overhead budget is used to provide an estimate of the overhead costs that could be made during a specific period of time.
Selling and administrative expense budget	The selling and administrative expense budget projects anticipated selling and administrative expenses for the budget period. In this budget, as in the preceding one, expenses are classified as either variable or fixed.	A selling and administrative budget is used to plan for selling and administrative costs.
Budgeted income statement	The budgeted income statement is the important end-product of the operating budgets. This budget indicates the expected profitability of operations for the budget period. The budgeted income statement provides the basis for evaluating company performance.	A budgeted income statement is used to project net income or loss and federal taxes.
Cash budget	The cash budget shows anticipated cash flows. This budget is considered to be the most important output in preparing financial budgets. The cash budget contains three sections; cash receipts, cash disbursements, and financing and the beginning and ending cash balances.	A cash budget is used to determine your business’ cash flow incoming and outgoing and the short term credit needs.

Cash Management Matrix

CheckPoint: Cash Management Matrix

Use Appendix B. For each principle in the matrix, describe how the principle ensures the
reliability of a company’s financial statements and provide at least one example of how the
principle might work in a real company. Do not use examples from your text.

Post Appendix B as an attachment.

Axia College Material

Appendix B

Cash Management Matrix

Directions: Using the matrix, list how each of the principles of internal control works, and give an example for each. Next, list how each of the principles of cash management works, and give an example for each. 

Principles of Internal Control	How it Works	Example
Establishment of responsibility	Establishment of responsibility means you are established with a certain responsibility.  You have the responsibility for a certain duty.	Such as the mail carrier delivering your mail, or when your boss designates you as the individual responsible for booking all his appointments and keeping track of them.
Segregation of duties	Segregation of duties is when more than one individual works together to achieve a task.	Such as when a collection team works together to call on late payments.
Documentation procedures	Documentation procedures are when you have a list of the way a certain document needs to be handled	Such as H & R block fills out your taxes for you.  They have a certain way the documents need to be handled, and it needs to be in the correct way every time.
Physical, mechanical, and electronic controls	Physical, mechanical, or electronic controls are items that have a physical presence that need people to manipulate them in order for them to work.	Such as cash registers, safes locks or bank vaults.
Independent internal verification
Other controls

Principles of Cash Management	How it Works	Example
Invest idle cash	Investing idle cash means to use cash that is not making a profit on itself and put that cash into something that will.	Such as buying shares of a company with cash in your savings account.
Plan the timing of major expenditures	Planning the timing of major expenses means to purposefully manage when you will use a large amount of cash to correspond to when you the expenditure is the most helpful and least hurtful.	Such as when you plan to hire more employees during your busy season.
Delay payment of liabilities	Delaying payment of liabilities is when you put a debt in a structure of payments.	Such as making a payment plan for the equipment upgrade you want to buy or have bought.
Keep inventory levels low	Keeping inventory levels low is a way of ensuring you are only spending what you need, never having an overabundance of materials you do not need or can use in a reasonable amount of time.	Such as office supplies, buying a small inventory to keep on hand without making frequent store trips but not so much as to overspend your budget.
Increase the speed of collection on receivables	Increasing the speed of the collection of your receivables means causing your income to increase in some way.	Such as having a sale to draw in customers, or spending more time and/or energy calling for late payments.