Cash budget is prepared by:
ATracking inventory days
BSubtracting profit from sales
CCombining variable and fixed cost
DAdding receipts and deducting payments
Answer & Solution
Correct answer: D. Adding receipts and deducting payments
1. The cash budget tracks the cash flow stream over the budget period.
2. Opening balance is adjusted by inflows (receipts) and outflows (payments).
3. The closing balance is the running cash position.
4. Hence the cash budget is prepared by adding receipts and deducting payments.
_Source: ICAI BoS Inter Paper 3, Ch 15 "Budget", §15.7.4 ¶2_
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