Statement of forecasted cash inflows and outflows

Statement that is prepared including the proposed cash inflows to and outflows from the business during a specific future period is known as statement of forecasted (budgeted) cash inflows and cash outflows. The amount of cash available within a business at the end of a certain period can be calculated by preparing this statement. This shows the cash inflows to the business and outflows from the business during a specific future period and the cash balance at the end of that specific period.

Cash inflows

Following are recorded as cash inflows of a business.

# Capital invested by the owners.
# Obtaining bank loans.
# Receiving cash from cash sales.
# Receiving cash from debtors.
# Income received by hiring buildings or other assets.
# Investment income and interest received by investing the money of the business and any other inflow of cash into the business.

Cash outflows

The cash outflows of a business is determined based on the cost estimations included in the production, marketing, administrative and financial plans of the business. Accordingly few reasons for the outflow of cash from the business are given below.

# Buying fixed assets.
# Buying inventories of raw materials or merchandise.
# Paying for electricity, telephone, insurance, transportation, rental, and employee salaries .
# Payments for the creditors.
# Paying loan installments and interest.
# Paying taxes.

Cash balance

The difference between the cash inflows and outflows during a specific period or the balance available at the end of the said specific period is known as cash balance.

Cash balance = Cash inflows - Cash outflows


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