What are cash receipts in accounting?

Master budget. A master budget is a budget that displays all of the information of an organization's revenue-generating activity, focusing on an overview of profit and expenses. Professionals use data and information from a company's operating budget to determine a company's master budget.

Master budgets reflect the following items:

• Cash inflows

• Cash outflows

A company's cash flow statement determines these items, and estimations are included on a company's balance sheet at the end of an accounting period.

Flexible budget. Flexible budgets are a type of budget organizations can use that allows for adjustment throughout a fiscal year, depending on profits and cost changes during the fiscal year. When flexible budgets are utilized, organizations first account for the fixed expenses and costs they expect.

These should be costs and expenses that they believe won't change over a fiscal year. Next, they allow for fluctuating variable costs or expenses and review costs periodically over the year to make live adjustments.

Flexible budgets require accountants or accounting departments at companies to use their imaginations and create hypotheticals for potential and unexpected costs. A flexible budget helps companies to adjust to their needs throughout a period as different key factors change, including things like:

• A high increase or decrease in the demand for specific products and services

• Seasonal hikes in labor costs

• The development of new technology, its necessity, and its added value to a business.