Which of the Following Statements Is CORRECT

question 86

Multiple Choice

Which of the following statements is 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 developed separately,and although they are both important to the firm,one does not affect the other.
• C) Since depreciation is a non-cash charge,it neither appears on nor has any effect on the cash budget.
• D) The target cash balance should be set such that it need not be adjusted for seasonal patterns and unanticipated fluctuations in receipts,although it should be changed to reflect long-term changes in the firm's operations.
• E) The typical cash budget reflects interest paid on loans as well as income from the investment of surplus cash.These numbers,as well as other items on the cash budget,are expected values;hence,actual results might vary from the budgeted amounts.

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Definitions:

Manufacturing Costs

The total expenses involved in making a product, including direct materials, direct labor, and factory overhead.

Markup Percentage

The proportion added to the purchase price of products to cover operational costs and profit, which sets the retail price.

Total Cost

The complete expenditure incurred by a business, combining both fixed and variable costs to produce goods or services.

Variable Cost

Costs that vary directly with the level of production or sales, such as materials and labor.