Type: Exploratory
Pages: 2 | Words: 319
Reading Time: 2 Minutes

The study of profit and loss is quite crucial in about every subject, on which every individual and the companies merely accentuate. If we see broadly then we will get to know that the essence of budgeting is quite indispensable to finance the day to day operations of the company. Likewise the companies, individuals also make their budget plan to go effectively and smoothly to finance their each and every activity. The main prospective of this study is quite straightforward; we have to make a budget plan for a couple. The names of the persons are Donna and Sherman Terrel. Donna is a systems analyst with an airplane manufacturer, and Sherman is working on a master’s degree in educational psychology. The budget for the year 2010 is as follows,

Donna Salary 3800 (45600/12)


Sherman (3000*3)


Sherman’s Scholarships


Total Earnings For the Year


Less: Total Expense


Net Cash Flow


The net cash flow does not include the payable amount of $2400 and $1200 which will be payable to the scholarship in the month of February and October respectively. If we also subtract these amounts then the Net Cash Flow available at the end of year’s end to the couple is $3900. The couple intends to maintain an amount of minimum $600 in their accounts to avoid minimum account balance penalties. It has also been included that an amount of $1500 may be earned by Sherman in the month of April as his company wants to hire him to remodel a project. This amount will increase the net cash flow positively and will also leave a positive impact over the overall position of budget of Sherman and Donna. The couple has to contemplate on their every expense because if the expense increases sharply then it would be an ample chance that the net cash flow in hand will decrease from the minimum level as well.

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