The purpose of the cash budget is to:
A) be used as a basis for the operating budgets.
B) provide external users with an estimate of future cash flows.
C) help managers plan ahead to make certain they will have enough cash on hand to meet their operating needs.
D) summarize the cash flowing into and out of the business during the past perioD.
The cash budget helps managers plan ahead to make certain they will have enough cash on hand to meet their operating needs.

Question

Quizplus · Accepted Answer

The cash budget is specifically designed to help managers plan ahead and ensure that they will have sufficient cash to meet their operating needs. It takes into consideration the inflows and outflows of cash, including expected receipts and payments, and provides a clear picture of the company's cash position over a given period of time. While it may be used as a basis for operating budgets and provide external users with insight into future cash flows, these are secondary purposes to its primary use as a management tool.

The Purpose of the Cash Budget Is To