Revenue and Cash Budgets

When an annual revenue budget is detailed by month, each month’s actual revenues can be compared to the budgeted amount. Similarly, the actual year-to-date revenues can be compared to the budgeted revenues for the same period. In other words, monthly revenue budgets allow you to monitor revenues as the year progresses instead of being surprised at the end of the year. The income part of the budget, also known as government revenue, consists of spending and revenue from taxes and other sources. A differentiation of tax and non-tax revenues is made while considering the total revenues.

Budget users do not need precise estimates, and so rounded-up whole numbers are adequate.

What are the Components of a Revenue Budget?

This in turn gives you insights prior to the start of the accounting year. Monthly revenue budgets allow you to monitor the receipts right from the beginning of the year. The revenue budget is primarily concerned with sales income or other income generated in other ways, while the cash budget ensures that the company has enough-but not too much- cash on hand during the period ahead. The total bill of the revenue receipts and expenditures is tabled during the presentation of the annual Union Budget. Generally, the government’s expenditure exceeds its income, creating a revenue deficit or fiscal deficit. It also includes the interest it pays on loans it borrows and subsidies it provides.

If your business performed as expected or better, you may determine that current practices are adequate — but if your company fails to meet expected goals, it may be necessary to adjust your practices. You can incorporate your finalized revenue budget with financial performance analyses and scrutinize the growth of your business. Tax revenues include income tax, excise duties, corporate tax, customs duties, and government levies.

How to Budget Money for Salary & Overtime

Revenue budgets are primarily concerned with sales income or income generated in other ways. Our goal is to deliver the most understandable and comprehensive explanations of financial topics using simple writing complemented by helpful graphics and animation videos. Finance Strategists is a leading financial literacy non-profit organization priding itself on providing accurate and reliable financial information to millions of readers each year. This team of experts helps Finance Strategists maintain the highest level of accuracy and professionalism possible. Our team of reviewers are established professionals with decades of experience in areas of personal finance and hold many advanced degrees and certifications.

Interest from loans, dividends from investments, fees, and other income make up Non-Taxed Income. Non-tax revenue includes the interest earned on the government’s investments, loans and income from other services it renders. A cash budget includes expected sales income or other income as scheduled as to when it is expected to come in and how it will be allocated. The inclusion of Depreciation and other non-cash items is also important to remember when preparing a cash budget. For financial planning purposes, it translates into cash receipts and cash disbursements. The revenue budget is the total of the government’s revenue receipts and revenue expenditures.

Revenue budgets ensure that businesses efficiently allocate resources — and in doing so they save time, effort and money. Revenue budget of government comprises of the revenue receipts and the expenses that need to be met with the revenue receipts. The components of a Revenue Budget are Government revenue and expenditure. Spending and revenue from taxes and other sources make up the budget’s income component, which is also known as government revenue. The government’s spending and income from taxes and other sources are referred to as revenue receipts and make up the revenue budget.

Connect With a Financial Advisor

Revenue budgets are forecasts of a company’s sales revenues and expenditures, including capital-related expenditures. The components of revenue budget are the number of units sold, sales revenue, capital expenses and operational expenses. It is essential that you establish whether you possess enough financial means to conduct operations, grow your business and ultimately make a profit. Without this planning, your company’s future may be uncertain as you may not know how much money you’re taking in or spending.

At times, this can be difficult for small businesses to calculate, especially for those that have just started — and therefore have no historical data. Business plans reflect the true state of an organization’s current business and help to analyze every aspect of the business, including expected revenues. It includes the number of units you expect to sell, along with the number of customers that you expect will buy your products or services. It also includes the price you will charge for those products and services.

How does the cash budget help a company?

When preparing a cash budget, it is important to calculate and project forward cash receipts and cash disbursement items. The budgeted amount of revenue is then compared to the budgeted amount of expenses in order to determine if the revenues are adequate. Learning of a potential problem before the year begins is a huge benefit because it allows for alternative actions to be developed prior to the start of the new year. The articles and research support materials available on this site are educational and are not intended to be investment or tax advice. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. The cash budget helps ensure that the company has enough-but not too much-cash on hand during the period ahead.

The main benefit of a revenue budget is that it requires looking into the future. The revenue budget should contain the assumptions made about the future and the details about the number of units to be sold, the expected selling prices, and so on. The expected sales income or other income is scheduled as to when it is expected to come in and how it will be allocated.

• The total bill of the revenue receipts and expenditures is tabled during the presentation of the annual Union Budget.
• In other words, monthly revenue budgets allow you to monitor revenues as the year progresses instead of being surprised at the end of the year.
• Some of the examples of revenue budget include income from taxes, dividends, investments, and profits.
• Generally, the government’s expenditure exceeds its income, creating a revenue deficit or fiscal deficit.

A church’s annual revenue budget should be prepared independently of the expense budget. The total of the revenue budget is then compared to the annual expense budget. If the annual revenue budget is less than the annual expense budget, action can be taken to develop additional revenues or to reduce the planned expenses before the accounting year begins. As reported by Accounting Coach, the revenue budget helps businesses predict the amount they will earn when they sell their products and services.

We follow strict ethical journalism practices, which includes presenting unbiased information and citing reliable, attributed resources. Revenue needs to be scheduled as to when it is expected to come in and how it is to be allocated. Our writing and editorial staff are a team of experts holding advanced financial designations and have written for most major financial media publications. Our work has been directly cited by organizations including Entrepreneur, Business Insider, Investopedia, Forbes, CNBC, and many others. Cash budgets ensure that the company has enough—but not too much—cash on hand during the period ahead. Public and private companies registered under the Companies Act, 1956, are subject to this tax.

Some of the examples of revenue budget include income from taxes, dividends, investments, and profits. Capital budget examples include disinvestments that reduce the government’s share of total assets and increase liabilities. The revenue budget causes no impact on the government’s assets and liabilities, while the capital budget does change the status of the total number of government assets and liabilities. Once you have successfully constructed a revenue budget you can compare it with your actual performance. This analysis can help you determine if you should continue your current practices or take corrective measures.

Harold Averkamp (CPA, MBA) has worked as a university accounting instructor, accountant, and consultant for more than 25 years. Our mission is to empower readers with the most factual and reliable financial information possible to help them make informed decisions for their individual needs. At Finance Strategists, we partner with financial experts to ensure the accuracy of our financial content.