Which of the Following Statements Regarding Cash Budgets Is Correct

question 51

Multiple Choice

Which of the following statements regarding cash budgets is correct?

• A)Payments for credit purchases should not be included in a cash budget.
• B)Only inflows from cash sales should be included in cash budgets.
• C)Once a firm sets a target cash balance, the amount should remain constant (fixed) as long as the firm continues operations.
• D)Cash budgets should not include cash invested in capital budgeting projects.
• E)Cash budgets should include the firm's tax expenses (liabilities).

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Definitions:

Planning Budget

A budget created at the beginning of the budgeting period that is valid only for the planned level of activity.

Budgeted Overhead Cost

The anticipated indirect costs of production planned for a specific period, often part of a company's operating budget.

Variable Overhead Costs

Expenses that fluctuate with production volume, such as utilities or raw materials, which are not directly linked to a specific unit of production.

Number of Guests

Refers to the count of individuals attending an event or accommodated by a service, such as in a hotel or restaurant.