The cash budget and the budgeted income statement are necessary to prepare the budgeted balance sheet and budgeted statement of cash flows.

Question

Quizplus · Accepted Answer

The cash budget provides information about expected cash inflows and outflows during a specific time period, which is necessary to prepare the budgeted statement of cash flows. The budgeted income statement provides information about projected revenues and expenses, which is necessary to prepare the budgeted balance sheet. Therefore, both budgets are necessary for the preparation of the budgeted balance sheet and statement of cash flows.

The Cash Budget and the Budgeted Income Statement Are Necessary