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Question

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

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

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.

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