ACCOUNTING FOR DECISION MAKING

Running head: ACCOUNTING FOR DECISION MAKING
Accounting for Decision Making
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1ACCOUNTING FOR DECISION MAKING
Table of Contents
Executive Summary:........................................................................................................................2
References:......................................................................................................................................7

2ACCOUNTING FOR DECISION MAKING
Executive Summary:
Budget is considered to be one of the essential components that are used by the
management to improve profitability in the long run. Furthermore budget also allows the
organization to determine relevant actions that could be taken under different circumstances and
situations. Moreover, budget is also considered as one of the essential financial planning process,
which identifies the cash inflows and outflows that would be generated over the period of next
financial year. Budgets are relatively conducted to identify different segments such as income
statement budget, cash budget, sales budget, cost of sales budget, purchase budget, selling and
administration expense budget (Klychova, Faskhutdinova and Sadrieva 2014). The information
regarding the budget that is prepared Business Advisory Pty Ltd is mainly depicted as follows.
Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 TOTAL
OPENING CASHBALANCE 227,200 175,281 147,117 116,737 55,550 22,831 (16,139) (89,174) (129,243) (159,641) (213,002) (232,127) 227,200
CASHINFLOWS:
Cash flows 57,087 65,056 64,244 62,143 61,255 54,127 50,177 52,179 66,766 76,802 85,540 89,937 785,311
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TOTALCASHAVAILABLE: 284,287 240,336 211,361 178,881 116,804 76,958 34,038 (36,996) (62,477) (82,839) (127,462) (142,190) 1,012,511
CASHOUTFLOWS
Drawings 7,580 7,580 7,580 7,580 7,580 7,580 7,580 7,580 7,580 7,580 7,580 7,580 90,960
Cash payments 12,927 26,390 27,016 27,253 27,145 25,490 23,965 25,418 29,556 34,084 37,836 35,718 332,798
Sale assistants 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 240,000
Marketingexpense 1,476 1,476 1,476 1,476 1,476 1,476 1,476 1,476 1,476 1,476 1,476 1,476 17,712
Office staff 9,000 9,000 9,000 9,000 9,000 9,000 9,000 9,000 9,000 9,000 9,000 9,000 108,000
Optometists 26,000 26,000 26,000 26,000 26,000 26,000 26,000 26,000 26,000 26,000 26,000 26,000 312,000
Business Insurance - - - - - - 3,168 - - - - - 3,168
Bank fees 132 132 132 132 132 132 132 132 132 132 132 132 1,584
Office supplies 180 180 180 180 180 180 180 180 180 180 180 180 2,160
Council rates - - - - - - - - - - - 1,008 1,008
Rent 29,250 - - 29,250 - - 29,250 - - 29,250 - - 117,000
Utility expense - - 779 - - 779 - - 779 - - 779 3,114
Interest 2,461 2,461 2,461 2,461 2,461 2,461 2,461 2,461 2,461 2,461 2,461 2,461 29,530
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CLOSING BANKBALANCE 175,281 147,117 116,737 55,550 22,831 (16,139) (89,174) (129,243) (159,641) (213,002) (232,127) (246,523) (246,523)
CASH BUDGET
The above table provides information regarding the overall cash budget, which has been
considered to become negative for the next financial year. The overall expense that is conducted
throughout the months of 2020 is considered to be negative, which led to a negative value for the
overall cash budget at the end of the financial year. The company’s cash balance started to