Which of the Following Statements Is CORRECT

question 128

Multiple Choice

Which of the following statements is CORRECT?

• A) 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.
• B) Since depreciation is a non-cash charge, it neither appears on nor has any effect on the cash budget.
• C) 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.
• D) 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.
• E) Shorter-term cash budgets, in general, are used primarily for planning purposes, while longer-term budgets are used for actual cash control.

---

Definitions:

Years

Units of time equal to 365 days or 366 days in a leap year, used in the measurement of the duration of events or intervals between them.

Carrying Capacity

The maximum number of individuals of a species that an environment can support sustainably without degrading.

Earth's

Pertaining to the third planet from the Sun, known for its vast oceans, atmosphere, and diverse life forms; our home planet.

Exponential Growth

A growth pattern in which the rate of growth is proportional to the current size, resulting in a rapid increase over time.