For those new to accounting, the process of preparing budgets in addition to cash-flow forecasting are very helpful and useful habits to get into. Budgeting is an important part of any business and is also utilised for personal financial planning. This approach is forward-looking and helps to plan the amount required to cover various business needs.

What are Fixed and Variable Costs?

In order to carry out budgeting one must first understand the differences between fixed and variable costs. Fixed costs refer to things that are likely to remain very stable, such as in the case of someone owning a small shop, where fixed costs would include a similar amount of electricity being used each month or quarter.

Variable costs are simply costs which may change, for example if Mr. Smith sells a large amount of stock one months then there would need to be extra money spent on replacing that stock. The amount one spends depends on the amount of stock sold so this is described as a variable cost.

• Mini Cash Isa Best Rates

  ISA Rates - Find out where you can get the highest tax free savings rates available. Compare the best ISA interest rates today!

• Jones New York Cashmere

• Arizona Cash Filling Survey

• Wildlife Trust Lancashire

  The Royal Society of Wildlife Trusts. Today there are 47 local Wildlife Trusts covering the whole of the UK, and we have more than 800,000 members. We manage ...

• Refinance Cash Out Taxes