The number and type of intervals in the cash budget depend on the nature of the business. The more seasonal and uncertain a firm's cash flows, the greater the number of intervals and the shorter time intervals.

Question

Quizplus · Accepted Answer

A firm with seasonal and uncertain cash flows requires more frequent and shorter intervals to effectively manage its cash flow. This allows for better forecasting, and helps the company avoid cash shortages or surpluses. However, a firm with more stable and predictable cash flows may only require fewer and longer intervals.

The Number and Type of Intervals in the Cash Budget