Understanding Cash Budgets and Reports

What is the primary purpose of a cash budget?

• To determine the profitability of a company

• To estimate cash inflows and outflows over a specific period

• To calculate the net income of a company

• To assess the company's market share

Which of the following is NOT a component of a cash budget?

• Cash Inflows

• Cash Outflows

• Net Cash Flow

• Gross Profit

What is included in cash inflows in a cash budget?

• Operating expenses

• Loan repayments

• Sales receipts

• Dividends paid

Which of the following is a cash outflow in a cash budget?

• Sales receipts

• Loan proceeds

• Operating expenses

• Interest earned

What is the purpose of performance reports in relation to cash budgets?

• To forecast future cash flows

• To compare actual performance with budgeted expectations

• To calculate the company's tax liability

• To determine the company's market value

What does variance analysis in performance reports help identify?

• The company's market share

• Differences between actual and budgeted figures

• The company's net income

• The company's total assets

Which of the following is a risk of not having budget schedules?

• Increased market share

• Late payments

• Higher profitability

• Improved cash flow

What is the relationship between cash budgets and performance reports?

• Cash budgets are reactive, while performance reports are proactive

• Cash budgets set benchmarks for performance reports

• Performance reports determine cash budgets

• There is no relationship between them

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

• Rent payment

• Salary payment

• Dividends received

• Tax payment

What is the result of subtracting cash outflows from cash inflows in a cash budget?

• Gross Profit

• Net Cash Flow

• Operating Income

• Net Income