Which of the Following Statements Concerning the Cash Budget Is

question 17

Multiple Choice

Which of the following statements concerning the cash budget is CORRECT?

• A) Depreciation expense is not explicitly included, but depreciation's effects are reflected in the estimated tax payments.
• B) Cash budgets do not include financial items such as interest and dividend payments.
• C) Cash budgets do not include cash inflows from long-term sources such as the issuance of bonds.
• D) Changes that affect the DSO do not affect the cash budget.
• E) Capital budgeting decisions have no effect on the cash budget until projects go into operation and start producing revenues.

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Definitions:

Payback Period

The duration required to recover the cost of an investment, calculated by dividing the initial investment by the annual cash inflow.

Heating System

A mechanism for maintaining temperatures at an acceptable level; by using thermal energy within a home, building, or other dwelling.

Required Rate Of Return

The minimal annual profit rate required to attract investment from individuals or corporations into a specific security or initiative.

Net Present Value

A financial analysis technique used to estimate the viability of projects or investments by discounting expected future cash flows to their present value.