Term Paper on "Accounting Congo Limited Budget (in 1000's) Cash"
Term Paper 5 pages (1426 words) Sources: 4
[EXCERPT] . . . .
AccountingCongo Limited Budget (in 1000's)
Cash Balance from prev. month
Cash Sales
Credit Sales
Purchase for resale
Salaries and Wages (PAID in the MONTH EARNED)
Overhead Expense (PAID in MONTH FOLLOWING the MONTH in WHICH EXPENSE OCCURRED)
Provision for Credit Losses
(Assumes 5% of credits will become bad debt and uncollectable)
Cash discount for goods purchased ( 2.5% discount on month following purchase)
Property, Plant, and Equipment (2 Vans at $90,000 each paid for in APR)
Unpaid Taxes
Bank balance
Budgeting is an essential function any business to perform. As such, I agree with the statement that management will be rendered ineffective without the current use of budgeting within their monthly activities (Cliche, 2012).
To begin, budgeting serves as a means of prioritizing business activities. In many instances, business has limited amounts of resources and a seemingly infinite amount of methods in which to deploy them. For large, multinational corporations the problem is compounded as various departments jockey to receive the maximum amount of funding for their own projects. By budgeting properly, management can better ascertain which projects will be fully funded and which project will not be funded. This prioritizing ensures that the business enters markets or engages in activities in which it has relative competitive advantages in. Furthermore, through proper capital budg
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Now without capital budgeting, management may be inclined to accept projects or allocate funds to unproductive means. For smaller companies, this can be particularly detrimental as they don't now possess the needed capital to recovery from budgeting mistakes. This occurs constantly in business, as management attempting to expand their own domain, undertake expensive and costly projects. These projects ultimately have to be written down, divested, or sold at an extreme discount. Although budgeting would not eliminate these occurrences altogether, it does help management prioritize its activities. For one, budgeting and prioritization have a very symbiotic relationship in regards to the underlying business strategy of a firm. Financial budgeting, as indicated above is simply the allocation of available resources to achieve a desired rate of return. With prioritization, management must consider a litany of possible scenarios and outcomes in regards to their investments. Typically, the more risk inherent within a business strategy the larger the financial return should be. In practice however, management, in good faith, can take excessive risk without a corresponding high rate of return. Therefore, through prudent financial planning, management must be conservative in their subsequent assessment of risk and the prevailing macroeconomic environment. Budgeting has a very profound role in this assessment. One tool to aid in this process, management can use the DCF model. The DCF model provides the present value of future cash flows. Depending on the prevailing market rates, management can make a very informed decision in regards to financial planning. As with the budget of Congo Limited, they invested $180,000 in vans for underlying business operations. Management must be able to appropriate ascertain the return provided by the vans as relates to the business. In some instances, there is an opportunity cost of purchasing the vans. Management of Congo for example could have used the cash to open a warehouse of pay a dividend to shareholders, or simple save the money. By allocated the capital to vans, the management of Congo is asserting that the vans will generate more money for the business than any of the above alternatives. Now, many concepts in budgeting rely on management judgment. This judgment may lead… READ MORE
Quoted Instructions for "Accounting Congo Limited Budget (in 1000's) Cash" Assignment:
Accounting for Managers
From the data given, you will be required to prepare the answers for Question 1.(a). and Question 1.(b). :
QUESTION 1. (a).
Prepare a monthly Cash Budget in tabular form for the months : February, March and April, and in addition also showing the bank balance at each month*****s end.
NOTE: (Extra Monies have been paid to ***** for calculation answers).
QUESTION 1. (b).
Write a 1200 WordS Report, with reference to at least three (3) external sources to support your position, Discussing in fullest logic and details and support whether you agree or disagree with the following statement: *****Management of any business will be ineffective without the preparation and use of budgets.*****
Question 1.(a). : The following data is available from the various functional budgets prepared at Congo Limited.
January February March April
$*****000 $*****000 $*****000 $*****000
Cash sales 1,752 2,636 2,614 3,556
Credit sales 14,530 14,360 14,160 15,140
Purchase for resale 13,360 12,820 12,620 11,980
Salaries and wages 1,862 1,874 1,916 1,956
Overhead expenses 1,660 1,610 1,630 1,628
OTHER INFORMATION THAT is Available as Follows:
1. 5% of all sales on credit are expected to become bad debts. Receipts from credit customers are due in the month following sale.
2. All goods are bought on credit from suppliers who allow 2.5% cash discount for payment in the month following purchase.
3. Salaries and wages are paid in the month in which they are earned.
4. Payments for overhead expenses are made in the month following the month in which expenses are incurred. The above overhead budget includes $80,000 per month for depreciation.
5. Two new vans costing $90,000 each, are to be paid for in April.
6. Taxation amounting to $146,000 is to be paid in March.
7. The balance at the bank as at 31 January is expected to be S$768,000.
Important NOTE: Format and Important Notes:
1. To be type-written.
2. Spacing 1.5 with font size 12 using Arial script and justified.
3. Include page no.
4. Include a APA reference page type of referencing Reference Page at the end of your assignment. Minimum of 4 "APA" referencing references.
5. NO Plagiarism.
THANK YOU VERY MUCH FOR YOUR KINDNESS , TIME AND PATIENCE.
Order Number and time Delivery paid is : For this order to be delivered in One Day.
How to Reference "Accounting Congo Limited Budget (in 1000's) Cash" Term Paper in a Bibliography
“Accounting Congo Limited Budget (in 1000's) Cash.” A1-TermPaper.com, 2013, https://www.a1-termpaper.com/topics/essay/accounting-congo-limited-budget/7573841. Accessed 4 Oct 2024.
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