Big Bear Ski Lodge's cash budget for the month of March, 2010, shows a negative amount. Due to the fact that the months of January and February were quite lucrative and showed positive amounts, the finance manager will not borrow any money on the short-term to cover for March's deficit.

Question

Quizplus · Accepted Answer

Without additional information, it is not advisable to assume that the finance manager will not borrow money to cover the deficit. Even if previous months were profitable, unexpected expenses or low revenue in March could still result in the need for short-term borrowing.

Big Bear Ski Lodge's Cash Budget for the Month of March