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Cash Budgeting As A Basis For Decision
Making (A Case Study Of Aguata Local Government
Area)
TABLE OF CONTENT
TITLE PAGE
APPROVAL PAGE
DEDICATION
ACKNOWLEDGEMENT
ABSTRACT
TABLE OF CONTENT
CHAPTER ONE
1.1
INTRODUCTION`
1.2
STATEMENT OF PROBLEM
1.3
PURPOSE OF STUDY
1.4
SIGNIFICANCE OF STUDY
1.5
SCOPE AND LIMITATION
1.6
FORMATION OF HYPOTHESIS
1.7
DEFINITION OF TERMS
BRIEF
HISTORY
OF
AGUATA
LOCAL
GOVERNMENT AREA
REFERENCE
CHAPTER TWO
2.1
REVIEW OF RELATED LITERATURE
2.2
BUDGETING AS A DECISION-MAKING TOOL
2.3
BENEFITS/ADVANTAGES OF CASH BUDGETING
2.4
PREPARATION OF CASH BUDGET
2.5
FUNCTIONS OF THE BUDGET COMMITTEE
2.6
STAGES OF CASH BUDGET PREPARATION
2.7
GUIDELINE FOR CASH BUDGET PREPARATION
2.8
OBJECTIVE OF CASH BUDGETING
2.9
ESSENTIAL OF BUDGETING
REFERENCE
CHAPTER THREE
3.1
RESEARCH DESIGN
3.2
SAMPLE SIZE
3.3
METHOD OF DATA COLLECTION
3.4
METHOD OF DATA ANALYSIS TOOL
3.5
DECISION RULE CHI-SQUARE
REFERENCE
CHAPTER FOUR
4.1
PRESENTATION AND ANALYSIS OF DATA
CHAPTER FIVE
5.1
SUMMARY
5.2
FINDING
5.3
RECOMMENDATION
5.4
CONCLUSION
BIBLIOGRAPHY
QUESTIONNAIRE
CHAPTER ONE
1.1
INTRODUCTION
“For which of you desiring to build a tower does
not first
sit and account the cost whether he has enough to
complete it”
(Lk. 14:28).
Every rational economic unit has some objectives
to
attain.
Individuals, corporate bodies or governments
have objectives to achieve.
objectives,
resources
Unfortunately nature did
To achieve their respective
have
not
abundantly, whilst objectives and
to
be
distribute
needs
and varied as there are various economic
made
available.
her
resources
are
numerous
units.
But the
means (that is resources) to satisfy those needs
scarce.
are
very
Thus one has to utilize his available resources
effectively in order to realise what one want.
maximize the
one has to plan.
To
objective of an economic unit requires that
Planning, therefore is the process of determining the
future
course of action in order to attain a desired
objective or a set
goal. A business enterprise may have
as its objective the
erection of an addition factory in say,
seven years time. It therefore
draws
up
a
plan
to
accomplish the task it has set for itself.
Because finance is scarce, thus each year the enterprise
has to plan towards the building of the factory. This yearly
explain is known as budgeting – a subset of corporate plan.
To a lay man, budget is just an estimate of how to
spend money. To the government budget is an estimate of a
plan of
how resources are going to be supplied and
utilized stated a quantitative and monetar y terms within a
specified period.
To accountant therefore budget is a quantitative
statement in financial terms, prepared for a specific period,
it may be one
year for the realization of enterprise set
goals. It is thus a very
important
decision-making
instrument.
A budget is defined as a financial or quantitative
statement, prepared and approved prior to a defined period
of time, of the
policy to be pursued for the purpose of
attaining a given objective.
(A budget is the conversion usually by segments and on
short range basis of plan into figures, an accounting as it
were for the future).
A comprehensive budget is made up of functional or
sub- budgets.
budget,
selling
Some of them are, sales budget, production
material purchase budget, factory co st budget,
and
administrative budgets, capital expenditure
budget etc.
All
these
compressed in
functional
budget
are
summarized
and
one budget called the MATER BUDGET.
This is defined as a total debuget in which are
packaged in
one
statement
the
sale;
expenses
on
production, capital
movement on land, equipment and cash
budgets of an organization.
CASH BUDGET
Since cash is the most active financial account in a business,
the key in preparing a financial budget is therefore, a
forecast of cash flows leading to a cash budget.
A cash
budget is one of the most important budgets prepared in an
organisation. It shows in summary form, the expected cash
receipt and expected cash payment during the budget period,
liquidity and cash flow management a re key successful
operations of any organisation and it is with good reason
that
cash
budget
should
receive close attention from
accountants and managers. A cash budget is defined as the
planed cash position by interim period for a specific time
span” it consists of two parts.
a.
The planned cash receipt (inflows)
b.
Planed cash disbursements (outflows)
It is concerned with ways to speed up the inflow
of cash, ways to delay outflow of cash, sources of cash
and temporary uses of excess cash 2
Cash budget shows the effect of the budget
activities selling, buying, paying wages, investing in
capital equipment and so on, on the cash flow of an
organisation, it is a continuous activity with budgets
being rolled forwards as time progress 3 .
Cash budget are prepared in order to ensure that
there will be just sufficient cash in hand to cope
adequately with budgeted activities. The cash budget
may show that there is likely to be a deficiency of cash
in some future period in which cash over draft or loans
will have to be arranged or activities curtailed or
alternately the budget may show that there is likely to
be cash surplus in which case appropriate investment
or use for the surplus can be planned rather than
merely leaving the cash idle in current account.
1.2
STATEMENT OF PROBLEM
Budget is one of the controlling instrument by
Management.
It is a plan or estimate to be attained by an enterprise.
The problem is why budget goals in some cases failed
to be realised.
It is because of insufficient capital.
There are numerous needs but resources to satisfy these
need are very scarce.
It is with the view to find
solution to these problems that the researcher has
undertaken this study with Aguata Local Government
Area as a cash study.
1.3
PURPOSE OF STUDY
This study is embark upon in order to assist
organizations and other interested groups who use cash
budget in decision makings.
Infact the objectives of
this research are: To inform an organisation of its cash
position at any point in time.
To explain how
situational variable could effect budget goals and to
point out budget limitations.
1.4
SIGNIFICANCE OF STUDY
The significance of the cash budgeting are:
a.
Cash budgeting instills in executive as well as their
sub-ordinates
the
habit
of
basing
decision
on
investigations studies and research.
b.
It provides the yard stick for control of operations is a
business firm or any organisation.
c.
It makes possible the control over operation, revenue
and cost.
1.5
SCOPE AND LIMITAITON
In carrying out this work the researcher encounter
some constraints.
A.
Money:
A huge amount of money was needed in
printing out the questionnaires and equally large
amount of money was needed in shuttling between one
office and the other in distributing the questionnaires
and in collecting them back.
B.
Time:
The time allotted for the research work was
not enough as to enable the research give an in -depth
treatment to is.
C.
Low Response by the respondents:
Some
of
the
respondents would tell you to come and collect the
questionnaire in about two days time, only to be met
with their absence on the day appointed.
Then
to
reduce
this
constraints
made
the
researcher to
chose
Aguata
Local
Government
nearness as a scope of study.
Area
which
is
1.6
FORMATION OF HYPOTHESIS
Based on the statement of the problem the
following
hypothesis has been formulated.
A.
Ho: my organization has been operating a system of
cash budgeting.
HA: My organisation has not been operating a system
of cash budgeting.
B.
HO: Operating of cash budgeting in my organisation
has been continuous
HA: Operating of cash budgeting in my organisation
has not been continuos.
C.
HO: If my organisation experiences any cash budget
surplus, it invests it to field income
HA: If any organisation experiences any cash budget
surplus, it does not invest.
1.7
DEFINITION OF TERMS
CASH:
Money inform of coins and notes
rather
than cheques.
BUDGET:
A
financial
summary
of
estimated
income and expense of a government, business or
household for a given period of time, usually one year.
CASHFLOW:
The flowing of money into a business
(as income and out of business wages materials).
MANAGEMENT:
The body of these in positions of
administrative authority.
CREDITORS:
Persons, group of organisation to when
money is owned.
DEBTORS:
Person,
group
or
organisation
that
owns money.
SURPLUS:
Amount left over after one has used all
that one needs amount by which money received is
greater than money spent.
DECIFIT:
Amount by which something especially
sum of money is too small.
BRIEF
HISTORY
GOVERNMENT
OF
AGUATA
LOCAL
AREA
Aguata Local Government Area was one of the
oldest Local Governments in the Eastern Nigeria.
It
was created by then colonial master through the
indirect rule system. The came and sought for a land
to build and administrative centre to facilitate easy
administration and bring their government nearer tot he
people that was the year 1918. A renounced traditional
rules and prominent warrant Chief Ezeabasili (Gbulie
Aku 1 of Isuofia) showed them a virgin land that is
now the headquarter of Aguata Local Government Ar ea
to build according to him their temporal office which
thought would be temporal. The district officer (D.O)
as he was called then accepted the offer with good faith
and started the building.
The district officer was told that the name should be
named Aguata meaning land of grasses. With advent of
fine the site had undergone many changes.
Now the
headquarters is now an attraction centre with many
magnificent buildings here and there.
By then the towns that made up the local
government were forty-five (45) in number. After the
independence many of them agitated to carve out their
own local government out of their mother local
government.
The people of Orumba was granted an autonomy
in
1988
by then
government
of
Col.
Nnaemeka
Akonobi. Again it was spitted into Orumba North and
Orumba South in 1990.
Presently the Aguata Local Government Area is made
up of fourteen (14) town namely:
Achina,
Akpo,
Amesi,
Ikenga,
Iusofia,
Nkgologwu, Oraeri, Uga, Umuona, U muchu..
Almost
Ekwuluobia,
Aguluezechukwu,
Ezinifite,
Igbougwu,
all these communities have one or more secondary
school many commercial schools (both approved and
inspected, but yet to be approved, are more than 100
primary schools and nursery school.
The Local Government area is bounded in the nest
by Anaocha Local Government Area and in the Eastern
part by Orumba North Local Government Area. in its
Northern part Anaocha Local Government area on the
boundary.
While Ideato Local Government of Imo
State is on its southern part.
The Local Government Area is made up of
department namely, health and agricultural department
and finance department.
REFERENCE
Buter C. I.
Principles of cost accountancy
Cassell limited, London,
4 t h Edition 1973 pg. 467
Howard B. B
Introduction to Business Finance
And Uption M.
Mc. Grawhill Book Company
Incorporated American
1 s t Edition, 1953,pg. 169
Monwuba A. O
Principles
accounting
and
practice
Publisher
of
–
cost
Enugu
Nigeria
1 s t Edition, 1995 pg. 150
Enclychlopedia:
Americana Enclyclopedia Vol. 5
new standard Enclyclopedia Vol. 3 pg.
484.
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