Chapter 5 Budgeted financial statements Copyright 2003 Mc

Budgeted financial statements s Statement of financial performance s Statement of financial position s Cash flow statement The above budgets summarise the forecasts made in all other budgets. Copyright 2003 Mc. Graw-Hill Australia Pty Ltd PPTs t/a Budgeting, second edition, by Banks & Giliberti Slides prepared by Mya Aronfeld 2

Budgeted statement of financial performance is a summary of the following budgets s Sales and/or fees s Cost of goods sold s Operating expenses § marketing § administration § financial This budget is not affected by GST accounts. Copyright 2003 Mc. Graw-Hill Australia Pty Ltd PPTs t/a Budgeting, second edition, by Banks & Giliberti Slides prepared by Mya Aronfeld 3

Budgeted statement of financial position s This budget is prepared from asset, liability and owners equity accounts. s If GST payable is >GST input tax credits, the net GST payable is shown as a current liability. s If GST payable is <GST input tax credits, the net GST input tax credit is shown as a current asset. Copyright 2003 Mc. Graw-Hill Australia Pty Ltd PPTs t/a Budgeting, second edition, by Banks & Giliberti Slides prepared by Mya Aronfeld 4

Preparation of statement of financial position Examples of the information needed: s Net profit or loss s Accounts receivable balance s Accounts payable balance s Pattern of paying expenses s Rates and methods of depreciation s Any acquisition or disposal of assets s Any drawings made by the owner s Any capital contributions made by the owner Copyright 2003 Mc. Graw-Hill Australia Pty Ltd PPTs t/a Budgeting, second edition, by Banks & Giliberti Slides prepared by Mya Aronfeld 5

Budgeted statement of cash flows s Is a cash budget in a format that complies with either AAS 28 or AASB 1026. s If the GST payable is >input credits receivable in the relevant period the resultant amount is paid to the ATO. s If the GST payable is <input credits receivable in the relevant period the resultant amount will be refunded by the ATO. Copyright 2003 Mc. Graw-Hill Australia Pty Ltd PPTs t/a Budgeting, second edition, by Banks & Giliberti Slides prepared by Mya Aronfeld 6

The budgeted cash flow statement is divided into 3 main categories s Operating activities: provision of goods and services. s Investing activities: acquisition and disposal of non-current assets. s Financial activities: changes to the financial structure of the business. Copyright 2003 Mc. Graw-Hill Australia Pty Ltd PPTs t/a Budgeting, second edition, by Banks & Giliberti Slides prepared by Mya Aronfeld 7

Classification of cash inflows outflows employees Sale of G &S Interest received Operating activities Dividends received Copyright 2003 Mc. Graw-Hill Australia Pty Ltd PPTs t/a Budgeting, second edition, by Banks & Giliberti Slides prepared by Mya Aronfeld Suppliers of stock Other expenses Creditors for interest Government For taxes 8

Classification of cash inflows outflows Collection of loans Giving loans Investing activities Sale of non-current assets Copyright 2003 Mc. Graw-Hill Australia Pty Ltd PPTs t/a Budgeting, second edition, by Banks & Giliberti Slides prepared by Mya Aronfeld Purchase of non-current assets 9

Classification of cash inflows outflows Sale of shares Buy back shares Financing activities Pay dividends Borrowings Repay debt Copyright 2003 Mc. Graw-Hill Australia Pty Ltd PPTs t/a Budgeting, second edition, by Banks & Giliberti Slides prepared by Mya Aronfeld 10

Budgeted statement of cash flows for period ended. . . $ Cash flows from operating activities: Net cash inflow (outflow) from operating activities Cash flows from investing activities: Net cash inflow (outflow) from investing activities Cash flows from financing activities: Net cash inflow (outflow) from financing activities Net increase (decrease) in cash held Cash at beginning of period Cash at end of period Copyright 2003 Mc. Graw-Hill Australia Pty Ltd PPTs t/a Budgeting, second edition, by Banks & Giliberti Slides prepared by Mya Aronfeld $ 11