Final answer:
It is false that a single annual cash budget is sufficient for most companies. Companies often prepare cash budgets for smaller periods to forecast and manage cash flows effectively, thus avoiding potential liquidity issues.
Step-by-step explanation:
False. For most companies, a single annual cash budget is not sufficient. Cash budgets often need to be prepared for shorter periods, such as monthly or quarterly, because they provide a more detailed view of a company's cash position. Companies need to manage their cash on a regular and frequent basis to handle the varying cash inflows and outflows throughout the year. This is an imperative financial practice to avoid liquidity issues and to ensure there is always enough cash on hand to meet obligations. One reason why budgeting can be difficult is due to the necessity of making choices that may limit certain expenditures, like discretionary spending, in order to meet financial goals.