lesson 7

lesson 7 - Zachary Blanchard Lesson 7 aaec 1.What is the...

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Zachary Blanchard Lesson 7 aaec 1.What is the purpose of budgeting? Budgeting gives a business a realistic look at what the outlook is for the future. There are three types of budgeting; the operating budget, a cash flow budget, and a capital expenditures budget. A budget is a necessity because a manager, or the person who plans a budget, looks at the future and makes an estimate at what he believes the future will hold for the business. The fact that budgeting allows for future expenses and gives an idea what the business will be like in the future, it is a very necessary. 2.What are the three main types of budgets and how do they relate to each other? The three types of budgeting are the operating budget, a cash flow budget, and a capital expenditures budget. An operating budget is an estimate of sales and income plus the fixed and variable expenses. A cash flow budget is the amount and timing of the cash that is expected to flow in and out of the film during a certain period. The capital expenditures budget is basically a list of capital project that the business expects to have. The operating budget is the basic fund budget, it shows the sales and income plus the fixed and variable expenses. The cash flow budget shows the amount of cash coming in and going out, it shows exactly when the money should come in and go out. It is a small part of the operating budget. The capital expenditures budget is a measurement of the future capital projects the firm may have. This capital could vary from each year, and could reflect an expansion. The three budgets are twined together, but the operating budget is the most important, it keeps the business running. The cash flow shows cash
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This note was uploaded on 09/14/2008 for the course MIBO 6700 taught by Professor Langford during the Spring '08 term at UGA.

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lesson 7 - Zachary Blanchard Lesson 7 aaec 1.What is the...

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