Which of the Following Statements Best Describes Cash Flows That

question 8

Multiple Choice

Which of the following statements best describes cash flows that would be shown on a cash budget?

• A)Depreciation is included in the estimate of cash flows (Cash flow = Net income + Depreciation); hence, depreciation is set forth on a separate line in the cash budget.
• B)If cash inflows from collections occur in equal daily amounts but most payments are made regularly on the 10th of each month, then it is not necessary to use a daily cash budget. A cash budget focused on the end of the month will suffice.
• C)Sound working capital policy is designed to maximize the time between cash expenditures on materials and the collection of cash on sales.
• D)The cash flows shown on the cash budget are the actual cash inflows and outflows and thus different from the firm's free cash flows, because FCF reflects after-tax operating income and the investments required to maintain future operations.

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Definitions:

Distributive Strategy

Approach used to decide how resources or rewards are shared or distributed among group members.

Conflict Management

The practice of identifying and addressing disputes in a fair, effective, and reasonable manner to prevent escalation.

Minor Problem

A relatively unimportant or trivial issue that does not have a significant impact on the overall situation or outcome.

Partner

Refers to a person who takes part in an undertaking with another or others, especially in a business or company with shared risks and profits.