The cash budget is based on the ________ method of accounting.
A)cash
B)financial
C)accrual
D)hybrid

Question

Quizplus · Accepted Answer

The cash budget is a projection of future cash inflows and outflows, and is based on the cash method of accounting, which records transactions when they actually occur in terms of cash exchange. This is different from the accrual method of accounting, which records transactions when they are incurred, regardless of when cash is exchanged. Therefore, the cash budget is only based on actual cash that will be received and paid out, making the cash method of accounting the best choice for preparing a cash budget.

The Cash Budget Is Based on the ________ Method of Accounting