cash flow
BTEC First Diploma in Business Unit 3 Investigating Financial Control Introduction: In this assignment i will prepare an annual cash flow forecast using monthly datas and analyse the implications of regular and irregular cash inflows and outflows for a business organisation. I will also evaluate how cash flows and financial recording systems can contribute to managing business finances. Task 1 a A Cash flow relates to the amount of money received and spent in the given period. Cash flow problems occur when the amount spent is greater than the amount received and Cash flow statement is normally produced in a little more detail than the summary statements. A cash flow statement or statement of cash flows is a financial statement that shows how the inflows and outflows affect the business. The cash flow statement is useful in determining the short-term usefulness of a business. It is good if you have to pay bills and Cash flow forecast means preparing a cash flow statement for the future with predicted inflows and outflows. This is always easier to do for an established business because managers have more experience and knowledge on which to base their decision. In my opinion cash flow refers to the difference between the cash flowing into the business for example through sales revenue and the cash flowing out of the business for example bills and wages. A cash flow
Depreciation of fixed assets.
Depreciation Fixed assets are used again and again over a long period of time. During this time the value of many assets falls. This is called depreciation. Each accountants must work how much depreciation to allow each fixed assets. This can then be used in the balance sheet and profit and loss account. The balance sheet will show the book value the book value of assets. This is their original value minus depreciation. Depreciation is shown in the profit and loss account under expenses. This indicates that part of the original value is 'used up' each year. Eventually the entire value of the assets will appear as expenses, when the assets depreciate fully. This process of reducing the original value by the amount of depreciation is known as writing off. There are good reasons why a firm should allow for depreciation each year in its accounts-: * If it dose not, accounts will be inaccurate. If the original value of the assets were placed on the balance sheet this would overstate the value. Each value of the assets falls each year as they depreciate. * Fixed assets generate profit many years. It seems logical to write off the value of the assets over a whole period of time rather than when it is first bought. This matches the benefits from the assets more closely with
