Because the heart of the cash budget is the sales forecast, the cash budget is only as accurate as the sales forecast on which it is based.

Question

Quizplus · Accepted Answer

The accuracy of the cash budget depends on the accuracy of the sales forecast because the sales forecast is the primary driver of cash inflows. If the sales forecast is inaccurate, the cash budget will not be reliable, as it will not reflect the true cash flow needs of the business. Therefore, the statement is true, and option A is the correct answer.

Because the Heart of the Cash Budget Is the Sales