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A cash budget is primarily concerned with
Athe profit earned in the period
Bcash receipts and cash payments
Cthe closing inventory value
Dthe depreciation charged
Answer & Solution
Correct answer: B. cash receipts and cash payments
1. Profit and cash are not the same thing, because sales and receipts fall in different periods.
2. A cash budget is a detailed budget of cash receipts and cash payments.
3. It is what reveals a shortfall in time to arrange finance.
4. Profit for the period comes from the budgeted income statement instead.
_Source: ICAI Cost and Management Accounting Ch15 'Budgets and Budgetary Control', section 15.7_
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