Topic 15 Cash Budgets

What is a cash budget?

• A plan for cash receipts and payments

• An estimate of cash receipts and payments

• A record of past cash receipts and payments

• A summary of profit and loss

What is the main goal of a cash budget?

• To have enough money to pay bills

• To maximise profit

• To minimise expenses

• To increase sales

What is the difference between a cash forecast and a cash budget?

• A cash forecast is an estimate, a cash budget is a commitment
• A cash forecast is a commitment, a cash budget is an estimate
• A cash forecast is for past periods, a cash budget is for future periods
• A cash forecast includes profit, a cash budget includes expenses

How do lagging receipts affect cash flow?

• It delays cash inflows

• It accelerates cash inflows

• It has no impact on cash flow

• It increases profit

How do loan repayments affect cash flow?

• It reduces cash outflows

• It increases cash outflows

• It has no impact on cash flow

• It increases profit

How do drawings affect cash flow?

• It reduces cash outflows

• It increases cash outflows

• It has no impact on cash flow

• It increases profit

What is the effect of buying non-current assets on cash flow?

• It reduces cash outflows

• It increases cash outflows

• It has no impact on cash flow

• It increases profit

What is the effect of selling non-current assets on cash flow?

• It reduces cash inflows

• It increases cash inflows

• It has no impact on cash flow

• It increases profit

How does accounting software affect cash flow planning?

• It reduces human error

• It increases human error

• It has no impact

• It increases expenses