The cash budget identifies when a firm might have a temporary surplus of cash that it could invest.

Question

Quizplus · Accepted Answer

The cash budget helps a firm to identify its cash position over a certain period of time, which includes the cash inflows and outflows. By analyzing the cash forecast, a firm can identify when it might have a temporary surplus of cash that it could invest for short-term gains or use to pay down debt. Therefore, this statement is true.

The Cash Budget Identifies When a Firm Might Have a Temporary