Unit 7 - M3

461 Words2 Pages
Analyse the impact of budgeting changing… Impact of changing Ms.Wangs expenditure and income is that in Wang 1 she was earning less cash sales then in the revised. An example of this is in sales during the month of February the total was £2000, and then in the revised she sold £2051 so she gains an extra cash sales of £51. This is favourable for Ms.Wang as she has gained money. Budgeting has enabled Tidy Team to gain more sales, which means more of a cash flow forecast. Throughout the months January to December all of Tidy Team’s cash sales were favourable. Ms.Wang gains £762 which she could use to invest in her business or even pay bills etc. With cash flow forecast it outcomes the practical results that reflect the actual money a business like Tidy Team receive and pay out over a certain amount of time. Advantages of having cash sales instead of credit, is that with credit sales it takes longer to get into the business’s account. If Ms.Wang uses credit sales, she may not be able to pay bills as credit sales take longer to go into the account, this is a disadvantage. The difference of revised figures and original s an increase of cash flow forecast but the purchases increase which is taken out of the profit. The purchases have gone up is because of the retail price index (RPI). In inflation there is something called ‘anticipation inflation’, this is a type of inflation which is described when the economy is doing well, the economy is usually at it’s boom peak. The demand for a product/service goes up so the price of the service goes up. The opposite to anticipation inflation is unanticipated inflation which is when the price of goods/products unexpectedly rise. Ms.Wang originally spent £1900 a month on drawings and then she cut it back to £1000 a month. This saved her a total of £900 a month meaning she saved £10,800 in a year. She cut her

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