Question

Budgeting for cash Which of the following statements are true with regard to a cash budget? Check all that apply.

a. Cash budgets can be used to plan, coordinate, and control a firm’s activities.
b. A cash budget provides information about a company’s ability to repay its loans or meet its other obligations.
c. Annual budgeting information usually provides sufficient information to manage most companies.
d. A cash budget is a forecasted statement that shows how a company’s cash will be obtained and how it will be spent.

Answer 1

d. A cash budget is a forecasted statement that shows how a company's cash will be obtained and how it will be spent

Step-by-step explanation:

A budget is a blueprint or a forecast which projects estimated future costs, revenues, income or other data. Actual information is later compared with budgeted information to ascertain the deviations and their causes and form conclusions.

A cash budget is a projected forecast of a company's cash inflows and outflows in future. A cash budget is a representation of budgeted future cash receipts and payments to determine the excess or deficit.

In case of deficit, it implies requirement of funds in future. The budget is also used to determine the sources from where the enterprise plans to raise such funds.