The cash budget focuses on the firm's ability to generate sufficient cash inflows to meet its required cash outflows.

Question

Quizplus · Accepted Answer

The cash budget is a financial statement that shows the firm's expected cash inflows and outflows over a specific period of time. The main objective of the cash budget is to determine whether the firm will have enough cash on hand to meet its operating expenses, debt payments, and investment needs. Thus, the cash budget does focus on the firm's ability to generate sufficient cash inflows to cover its cash outflows.

The Cash Budget Focuses on the Firm's Ability to Generate