Question

"The primary purpose of the cash budget is to allow the firm to anticipate the need for outside funding or excess funds to be invested.

A True
B False"

Answer 1

The primary purpose of the cash budget is to help a firm anticipate its future cash flows, allowing it to plan for the need of outside funding or excess funds to be invested.

Step-by-step explanation:

The primary purpose of the cash budget is to help a firm anticipate its future cash flows, allowing it to plan for the need of outside funding or excess funds to be invested.

By creating a cash budget, a firm can forecast its inflows and outflows of cash over a specific period of time. This helps the firm identify any potential cash shortages or surpluses, allowing them to take appropriate actions such as securing additional funding or investing excess funds.