Intro to accounting

Which of the following are true of cash budgets? (choose all that apply)

• A budget is a financial plan for the future

• They show total profit and loss

• They help assess potential cash flow problems.

• They show total profit and loss

All the money coming into the business, such as sales are?

• Cash Available

• Receipts​

• Payments​

• Opening balance​

Cash left at the end of the month after all payments have been taken away from the business receipts is?

• The opening balance

• The total profit for the period

• The owners drawnings

• The closing balance

What is a cash shortage?

• When a debtor short pays an invoice

• When a business can’t pay its liabilities or expenses

• When the owner has high drawings

What are some of the things a business can do to reduce cash shortages?

• reducing the level of drawings or contributing additional capital

• reducing the level of expenses or postponing the payment of expenses

• postponing the purchase of additional assets or borrowing money externally

• generating additional income or offering incentives to debtors to encourage payment

• advertising to increase income through sale

What is a cash surplus?

• When a business can’t pay its liabilities or expenses

• When the wages are accounted for

• The accounts receivable ledger

• A cash budget may predict that an excess amount of cash will be available above and beyond the normal requirements of the business

What can be done with a cash surplus?

• pay off some liabilities or invest internally through the purchase of non-current assets

• withdraw some for personal use or invest the cash externally

• expand the business

• Make a reducing the level of drawings

A cash budget that spans 3 months is called a

• A simple cash budget

• Long term cash budget

• Quarterly cash budget

• A waste of time

The two main headings of a Cash budget are?

• Cash Debit and Cash Credit

• Cash Receipts and Cash Payments

• Cash Receipts and Cash Credit

• Accounts Payable and Accounts Receivable

In a quarterly budget, May's Closing Balance is the same as?

• June's Closing Balance

• May's Opening Balance

• It is not the same as anything

• June's Opening Balance