Question

A cash budget shows the expected cash receipts and cash expenditures during the budget period.

a. True
b. False

Answer 1

That statement is true

There is no accurate way exist to really know the exact amount of cash that would be needed for the budget period.

The cash budget was created by top level managers before entering the financial period in order to provide general expectation of the amount of cash needed for the following period. The amount could easily deviate lower or higher from the budget.