Question

A statement of the firm's expected cash inflows and out flows over a projected time period

• A. Cash budget
• B. Master budget
• C. Cash flow statement
• D. None of these

Answer 1

The correct option is A Cash budget

A cash budget is an estimation of company's cash inflows and outflows over a specific period of time. This budget is used to assess whether the firm is having sufficient cash or not.

A cash budget is very important. It allows a company to establish the amount of credit that it can extend to customers without having problems with liquidity.