Question

Which of the following statement is/are false regarding cash budgeting?

• A. Is used to forecast the receipts and payments of a firm.
• B. Useful to financial managers in determining the probable cash balances of a firm over the near the future.
• C. To cut down the possible deviations from the expected outcomes.
• D. Is used in determining the appropriate margin of safety.
• E. None of the above

Answer 1

The correct option is A Is used to forecast the receipts and payments of a firm.

Cash forecasts are different from cash budgets. Cash forecasting anticipates the likely financial position of a business in a future period, whereas cash budget shows the remedial actions that are planned to be taken by the management to nullify the future undesired deviations.