The implementation of a budget is the responsibility of the budget director. The success of the entire exercise of budgeting depends on two important factors.
First, proper and clear communication to all key people involved in the implementation of the budget. These stakeholders should have a clear understanding of what is expected of them and how to achieve the goals.
Second, cooperation and encouragement from the top management in achieving the budget targets. The company’s leading managers and executives should be willing to reward people who meet budget goals.
Ideally, top management and staff working at the lower levels of management should collaborate to prepare and implement the budget successfully.
Shown below are the budgeted statements of cash receipts and cash disbursements for the XYZ Company for the year ended 30 June 20×1.
|Total||First Quarter||Second Quarter||Third Quarter||Fourth Quarter|
|Opening Cash Balance||85,000||20,000||15,000||30,000||20,000|
|Total Cash Available||145,000||35,000||21,000||56,000||33,000|
|Minimum Cash Balance Required||20,000||5,000||5,000||5,000||5,000|
|Total Cash Needed||120,000||45,000||31,000||21,500||22,500|
|Excess of Cash Available Over Cash Disbursements||25,000||(10,000)||(10,000)||34,500||10,500|
|Budgeted Balance Sheet, 30 June 20×1|
|Liabilities and Owner’s Equity|
|Reserves and Surplus||20,000|