Preparing Operating Budgets and the Cash Budget

Overview/Description
Budgets translate an organization's strategic plans into actionable goals for respective departments. The cash budget and operating budgets, in particular, help departments plan the allocation and use of organization's financial resources. A budgeted income statement, which is the final operating budget to prepare, represents an organization's expected profitability if activities are carried out as planned in operating budgets. A cash budget is prepared to ensure availability of adequate cash to pay for expenses incurred during budgeted period. This course explores how some of the key operating budgets are prepared. In particular, it examines operating budgets that deal with production and cost of goods produced; and sales, administrative, and general expenses. It also explains how various figures for a budgeted income statement are calculated. Finally, it discusses various components of a cash budget.

Target Audience
Finance and nonfinance professionals, functional managers, executives, and all individuals involved directly or indirectly with budgetary planning and an organization's control process

Expected Duration (hours)
1.0

Lesson Objectives

Preparing Operating Budgets and the Cash Budget

recognize the benefits of being able to prepare operating and cash budgets

prepare a production budget in a given scenario

calculate the budgets used to determine the cost of goods produced

calculate the Selling, Administrative and General expenses (SAG) budget for a specific period

Identify the steps to take to prepare a budgeted income statement

match sub-categories to the cash budget components to which they belong