 In this discussion, we will discuss the discussion question of, describe the cash budget and how it is prepared. If we see an essay question or discussion question such as this, we may want to start off with those objectives of the budget, say, hey, the cash budget is going to be part of the total budgeting process. First, a word from our sponsor. Yeah, actually, we're sponsoring ourselves on this one because apparently the merchandisers, they don't want to be seen with us. But, but that's okay, whatever, because our merchandise is, is better than their stupid stuff anyways. Like our Accounting Rocks product line, if you're not crunching cords using Excel, you're doing it wrong. A must-have product, because the fact as everyone knows of accounting being one of the highest forms of artistic expression means accountants have a requirement, the obligation, a duty to share the tools necessary to properly channel the creative muse. 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So it'll be kind of towards the final products, kind of towards where we finally end up with the budgeted balance sheet and the budgeted income statement. The budgeted cash flow statements can be very important to the company as well because note that as we create our budget, just like when we create our financial statements generally, we generally think of them in terms of an accrual type basis. We're budgeting performance, how we're going to do, how we're going to perform on the income statement and where we will end up at the end of that point in time at the end of the year on the balance sheet in accordance with an accrual basis. But of course it's also important to consider this information in terms of a cash basis because we need to make sure that we have enough cash to process or go through this process. So the cash flow basis, you want to point out that when we go to the cash flow statement that it's going to be a very important component because we need to make sure that we have the proper cash flow in order to achieve our objectives and not have too much cash flow so that we're wasting the purchasing power of the cash flow. The cash flow statement as we say will be typically towards the end of the budgeting process so we can kind of figure out what those cash flows will be. We'll need some of the beginning budgets in order to figure out what the cash flow will be. We'll need the sales budget to get an idea of what the revenue will be and therefore what the cash receipts. We'll need the production budget, the raw materials budget, the direct labor budget. A lot of these items, these budgets are going to be necessary of course before we get down to the cash budget so that we can see what we believe will actually be the cash inflows and the cash outflows. Also important to note that that's what the cash budget is doing. It's measuring the inflows and the outflows of the cash. Therefore anything that is cash related will typically be in the cash budget. We need to have increases that are going to be cash within the time period and decreases cash related in the time period. That seems obvious but we got to point that out because it's not as obvious as we may think or may consider because of course the other statement that measures activity over time is the income statement and it's not on a cash basis so you could point out things therefore that are on the income statement that may not be on the cash flow statement. For example depreciation is a common example of an item that reduces the net income but is not on the cash flow statement. There's no cash affected so it's on one timing type of report, income statement, not on another kind of timing or activity type report which is the cash flow statement. The cash flow statement will also report those kind of timing types of things that won't be on the income statement because they're not part of basically the performance of that period. So for example if we were to take a loan or something like that increase in the loan or to pay off a loan then that typically isn't on the income statement. The journal entry for that would be increasing or decreasing cash and the other side being loan possibly interest expense on the on the or interest revenue depending on what we're doing on the income statement but the loan itself and the cash on maybe a transaction then that shows activity happening from a cash basis to make sure that our cash flow is sufficient to cover our needs but not too much so that we're wasting the purchasing power of cash. So we could go in and describe kind of the differences between the things that will be on a cash flow statement from those items on the income statement.