Select the Incorrect Statement Regarding the Cash Budget

question 14

Multiple Choice

Select the incorrect statement regarding the cash budget.

• A) The cash budget helps managers to anticipate cash shortages and excess cash balances.
• B) Cash inflows and outflows indicated on the cash budget are reported on a company's pro forma statement of cash flows.
• C) Cash payments may include outflows for inventory, selling and administrative expenses, and equipment purchases.
• D) The total cash available is calculated by adding cash receipts and the ending cash balance.
• SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question.
• 125) How do short-term plans differ from long-term plans?

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Definitions:

Shares

Units of ownership interest in a corporation or financial asset that provide for an equal distribution in any profits, if any are declared, in the form of dividends.

Consolidation

The process of combining assets, liabilities, and other financial items of two or more entities into one.

Corporations

Legal entities that are separate from their owners, offering limited liability to its shareholders, and created under corporate law.

Merger

The combination of two or more companies into a single legal entity, often to achieve greater efficiencies of scale and scope.