Home › US CMA Part 1 › Management Accounting › Budgeting › January estimated cash receipts are $118,000, in…
January estimated cash receipts are $118,000, including $50,000 from issuing stock, and estimated cash payments are $42,000. What cash increase does the cash budget show for January?
A$50,000
B$118,000
C$76,000
D$42,000
Answer & Solution
Correct answer: C. $76,000
1. The cash budget totals estimated receipts and then subtracts estimated payments.
2. Receipts of $118,000 include cash sales, collections on account and the $50,000 stock issue.
3. Payments of $42,000 include cash purchases, payables settled and an $8,000 equipment purchase.
4. The cash increase is $118,000 minus $42,000, which is $76,000.
5. Financing and investing flows sit in the cash budget even though they never touch the income statement.
_Source: Jonick, Principles of Managerial Accounting (UNG Press, CC BY-SA 4.0), section 7.10 Cash Budget_
Related questions
How should budget figures be understood once the period they cover has ended?A capital expenditures budget for 2021 lists cutting machinery $18,000, assembly machineryWhat does a capital expenditure budget list?March cash payments are $18,600 for cash purchases, $26,040 for March purchases on accountA company pays 30% of purchases in cash and 60% of purchases on account in the month of puIn March a company collects $24,800 of cash sales, $39,680 from March sales on account, $3January sales are $68,000, of which 20% are for cash and the rest on account, and 40% of sWhat does the cash budget estimate?