alleryStart learning →What does the cash budget estimate?
ANet income expected for the period
BCash receipts and payments for a period
CUnits to be produced in the period
DFixed assets to be bought over time
Answer & Solution
Correct answer: B. Cash receipts and payments for a period
1. The availability and commitment of cash is critical to planning and operational success.
2. The cash budget estimates cash receipts and cash payments for one or more periods.
3. Receipts come from cash sales, collections, other revenue, asset sales and issuing stocks and bonds.
4. Payments come from costs and expenses, invoices on account, asset purchases, debt, interest and dividends.
_Source: Jonick, Principles of Managerial Accounting (UNG Press, CC BY-SA 4.0), section 7.10 Cash Budget_
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