Question

Which of the following is not considered while preparing cash budget?

• A. Accrual Principle
• B. Difference in Capital and Revenue items
• C. Conservation Principle
• D. All of the above

Answer 1

The correct option is D All of the above

A cash budget is an estimation of the cash inflows and outflows for business over a specific period of time. The budget is used to assess whether the entity has sufficient cash to operate. Companies use sales and production forecasts to create a cash budget, along with assumptions about necessary spending and accounts receivable. If a company does not have enough liquidity to operate, it must raise capital by issuing stock or by taking a debt.