The first step in the preparation of a cash budget is:
A)Estimation of future spending
B)Estimation of asset value
C)Estimation of cash receipts
D)Estimation of future stock sales

Question

Quizplus · Accepted Answer

The first step in the preparation of a cash budget is to estimate the cash receipts, which is the cash that will be coming in to the business from various sources. This will help in forecasting the cash inflows and outflows for the budget period, which is necessary for effective cash management. Estimation of future spending (A), asset value (B), and future stock sales (D) are all important steps in financial planning, but they come after the estimation of cash receipts in the cash budgeting process.

The First Step in the Preparation of a Cash Budget