CASH BUDGETS AND PROJECTED INCOME STATEMENT

What is the purpose of a cash budget in Accounting ?

• to calculate the net profit

• to prepare financial statements

• to determine the tax liability

• to forecast cash receipts and cash payments

Which of the following items are included in a cash budget ?

• Depreciation expense

• Accrued expenses

• Income received in advance

• cash received from customers

Which of the following statements about cash budgets is true ?

• they are used solely for reporting purposes to stakeholders

• they are prepared on an annual basis only

• they help businesses manage cash flows effectively

• they are used to calculate profit for the year

Which of the following is an example of a cash receipt in a cash budget ?

• payment of salaries to employees

• purchase of equipment

• collection from debtors

While preparing a cash budget which of the following items would not be included ?

• A vehicle taken by the owner for his personal use

• credit sales

• loss on sale of asset

• provision for bad debts

• all of the above

Cash budget is prepared on which basis ?

• cash basis

• Accrual basis

cash budget is prepared because it :

• indicates probable cash positions as a result of a planned operations

• it indicates in advance whether the business will have excess cash or a shortage of cash

• it indicates the need to borrow money

• all of the above

what is the purpose of preparing the projected income statement ?

• to calculate cash flows

• to determine tax liabilities

• to reconcile bank statements

• to forecast future profitability

which of the following will be included in the projected income statement ?

• loan repayments

• purchase of buildings

• Creditors control

• depreciation

what does the term projected signify in context of the " projected income statement " ?

• it shows the actual financial results

• it reflects historical financial information

• it forecasts future financial performance

• it includes non- operating expenses