Mark wants to make sure he does not run out of cash so he is preparing a monthly cash budget. After determining the percentage of cash collections by month, he should
A) estimate the amount and timing of cash disbursements.
B) calculate cash flow from operations.
C) determine the end-of-month cash balance.
D) determine the beginning-of-the-month cash balance.

Question

Quizplus · Accepted Answer

To prepare a monthly cash budget, Mark has to estimate the amount and timing of cash disbursements, as well as the percentage of cash collections by month. This will allow him to project his cash inflows and outflows and determine his end-of-month cash balance. Therefore, A is the best choice. While calculating cash flow from operations and determining the beginning-of-the-month cash balance are also important steps in cash management, they come after estimating cash disbursements.

Mark Wants to Make Sure He Does Not Run Out