Question

A manager considers all of the following when he or she prepares the cash budget except question content area bottom

a. cash receipts from customers.
b. payments for inventory.
c. depreciation expense.
d. cash payments to suppliers.

Answer 1

A manager considers cash receipts from customers, payments for inventory, and cash payments to suppliers when preparing the cash budget. so the correct answer is option d.

Step-by-step explanation:

A manager considers various factors when preparing a cash budget for a business. One of these factors is cash receipts from customers, which represents the money received from sales or services provided Another factor is payments for inventory, which represents the cost of purchasing goods for resale. This includes payments to suppliers for raw materials or finished products.

Additionally, the manager needs to consider cash payments to suppliers, which represents the money paid to suppliers for the purchase of goods or services. However, depreciation expense is not directly considered when preparing the cash budget. Depreciation is a non-cash expense that represents the gradual loss of value of an asset over time, and it does not involve the actual flow of cash.

The question relates to the preparation of a cash budget in business management. In a cash budget, a manager is primarily concerned with forecasting and managing the cash inflows and outflows over a certain period. This includes calculating expected cash receipts from customers, preparing for payments for inventory, and ensuring there is enough cash for cash payments to suppliers. However, depreciation expense is a non-cash charge and does not involve the actual outflow of cash. Therefore, it is not considered when preparing a cash budget.

Answer 2

A manager will consider cash receipts, payments to suppliers, and payments for inventory when preparing a cash budget, but not depreciation expense because it is a non-cash charge and does not affect actual cash flow.

Step-by-step explanation:

When preparing a cash budget, a manager will consider various cash flows associated with the business operations. This includes cash receipts from customers, which are the incoming funds from sales or services provided. The manager will also account for cash payments to suppliers for any purchases made on credit that need to be paid in the upcoming period. Another consideration is payments for inventory, which include cash outflows for the acquisition of stock that will be sold to customers.

However, depreciation expense is not considered in a cash budget because it is a non-cash expense. Depreciation is an accounting method used to allocate the cost of a tangible asset over its useful life. Despite affecting net income on the income statement, it does not involve an actual cash outlay, and thus, does not impact the cash flow of a business in the period it is recorded.