Asked by Queen Jenni on May 10, 2024
Verified
What is a cash budget? How does management use a cash budget?
Cash Budget
A plan that estimates future cash inflows and outflows over a specific period of time.
Management Use
The application of information, analyses, and insights generated within an organization to make informed decisions, guide operations, and shape strategic planning.
- Gain insights into the preparation of a cash budget and its components.
Verified Answer
DD
Danny DaoudMay 16, 2024
Final Answer :
A cash budget estimates the expected receipts (inflows) and payments (outflows) of cash for a period of time. Management can arrange loans to cover anticipated cash shortages before they are needed. The cash budget also helps avoid a cash balance that is too large. An excess in cash could be invested in temporary income-producing securities such as U.S. Treasury bills or notes.
Learning Objectives
- Gain insights into the preparation of a cash budget and its components.