Which of the following statements concerning the cash budget is correct?
A) Depreciation expense is not explicitly included, but depreciation effects are implicitly included in estimated tax payments.
B) Cash budgets do not include financial expenses such as interest and dividend payments.
C) Cash budgets do not include cash inflows from long-term sources such as bond issues.
D) Statements a and b are correct.
E) Statements a and c are correct.

Question

Quizplus · Accepted Answer

Depreciation expense is not explicitly included in cash budgets, but its effects are implicitly included in estimated tax payments. This is because depreciation is tax-deductible, so higher depreciation expenses will lower taxable income and ultimately reduce tax payments, thereby increasing cash inflows. Statements b and c are incorrect because cash budgets typically include financial expenses and cash inflows from long-term sources such as bond issues.

Which of the Following Statements Concerning the Cash Budget Is