An entity's cash budget predicts a period of cash shortage throughout the final quarter of the financial year.What corrective action can the entity take to help restore the cash position to a cash surplus during this period?

Question

Quizplus · Accepted Answer

All of the above actions can help to restore the cash position of the entity. By improving inflows of cash through incentives to customers, reducing cash outflows by decreasing inventory levels, and delaying acquisition of fixed assets, the entity can help ensure it has sufficient cash reserve and even achieve a cash surplus during the final quarter of the financial year.

An Entity's Cash Budget Predicts a Period of Cash Shortage