Individuals generally do not prepare statements of cash flows concerning their personal activities.
But they do engage in cash budgeting—if not on paper, then at least in their heads.
Assume it is December 29—a Monday. While you are in school, you share a small apartment with another student and work part-time, both near your school to minimize expenses. In two days your rent for January, $200, will be due. You now have $140 in the bank; every Friday you receive a paycheck for $100. You probably see the problem. And it probably doesn’t look too serious; you can find a way to deal with it. That’s what budgeting is all about.
Let’s take this example a step further. In addition to the facts given above, your weekly cash payments include meals, $30; entertainment, $20; and gasoline, $10.
a. Using the following cash budget, compute your cash balance at the end of weeks 2, 3, and 4.

b. Evaluate your financialsituation.

  • CreatedApril 17, 2014
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