Which Statement Related to a Cash Budget Is Correct

question 80

Multiple Choice

Which statement related to a cash budget is correct?

• A)Capital expenditures are treated as a cash inflow on a cash budget.
• B)The cumulative surplus is computed prior to adjusting for the minimum cash balance.
• C)A positive net cash inflow for a period indicates the cash disbursements exceed the cash collections for the period.
• D)Financially healthy firms can have a negative quarterly net cash inflow.
• E)Firms generally set the minimum cash balance at zero for planning purposes.

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Definitions:

Useful Life

The estimated duration a fixed asset is expected to be usable for its intended purpose, impacting depreciation calculations.

Lease Space

The act of renting property or area for business purposes, such as office or retail space.

Salvage Value

The projected end-of-life resale value of an asset.

Depreciation Method

A systematic approach to allocate the cost of tangible assets over their useful lives, reflecting the asset's consumption, obsolescence, or loss of value.