3. More thorough than preparing a budget based on increments from last year. 4. Time consuming and costly. G. Cash Budgets 1. Summary of cash receipts and disbursements. 2. Purpose: a. To determine when cash will be lending institutions. so that lines of credit are set up with b. If excess funds are estimated in the future then planning for possible. 3. Steps in the Solution: a. Be sure to understand the accounts receivable collection pattern-it will be different in each problem. b. Ignore. -they are always non-cash expenses. c. Remember accounts receivable are recorded at their gross amount. Thus, when a collection pattern is given, the bad debt percent is, used. The collection (Sales on Account). pattern percentages and the bad debt percent should add up to 100%. 4. Remember collection patterns only apply to sales on H. Static Budget vs. Flexible Budget a. Static: b. Flexible