The cash budget is the primary short-term financial planning tool. The key reasons a cash budget is created are:
I. To estimate your investment in assets
II. To estimate the size and timing of your new cash flows
III. To prepare for potential financing needs

Question

Quizplus · Accepted Answer

The cash budget is primarily created to estimate the size and timing of new cash flows and to prepare for potential financing needs. It is not directly related to estimating investment in assets, although it may indirectly aid in this process by providing information on cash available for investment. Therefore, options II and III are the correct reasons for creating a cash budget.

The Cash Budget Is the Primary Short-Term Financial Planning Tool