Which of the Following Is Not a Valid Reason for Preparing

question 4

Multiple Choice

Which of the following is not a valid reason for preparing a cash budget?

• A) It enables required overdrafts to be anticipated and arranged with the bank.
• B) It reveals the expected bank balance as at the end of each month.
• C) It allows the business owner to see whether the business is likely to make a profit or a loss.
• D) It enables the timing of fixed asset expenditure to be planned.

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Definitions:

Unadjusted Balance

The initial balance of an account before any adjustments for interest, payments, or discrepancies have been made.

Accounts Receivable Assigned

Refers to the process where a company uses its accounts receivable as collateral for a loan, effectively assigning the rights to collect those receivables to the lender.

Risk of Ownership

This refers to the potential for loss or damages an owner can face while holding onto an asset or property.

Finance Company

A business that makes loans to individuals and commercial customers, distinct from banks and other traditional financial institutions.