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:

GDP Deflator

An economic metric that converts the gross domestic product (GDP) from current market prices into constant dollar terms in order to measure the real growth of an economy, excluding the effect of inflation.

GDP Deflator

An economic measure of inflation that reflects changes in the price level of all goods and services produced domestically, adjusting nominal GDP into real GDP.

Price Level

The aggregate price mean of the complete variety of goods and services within the economy.

Base Year

A specific year against which economic growth is measured, serving as a standard comparison for other years in index numbers and price comparisons.