Which of the Following Statements Is Most Correct

question 93

Multiple Choice

Which of the following statements is most correct?

• A) Shorter-term cash budgets, in general, are used primarily for planning purposes, while longer-term budgets are used for actual cash control.
• B) The cash budget and the capital budget are planned separately and although they are both important to the firm, they are independent of each other.
• C) Since depreciation is a non-cash charge, it does not appear on nor have an effect on the cash budget.
• D) The target cash balance is set optimally such that it need not be adjusted for seasonal patterns and unanticipated fluctuations in receipts, although it is changed to reflect long-term changes in the firm's operations.
• E) The typical actual cash budget will reflect interest on loans and income from investment of surplus cash. These numbers are expected values and actual results might vary from budgeted results.

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Definitions:

Trade Deficit

A situation where a country imports more goods and services than it exports, resulting in a negative balance of trade.

Exports

Goods or services sent from one country to another for sale.

Imports

Merchandise or services that are brought from one nation into another for retail purposes.

Trade Surplus

A situation where the value of a country's exports exceeds the value of its imports, indicating a positive balance of trade.