When a firm sells goods or services on credit,the owner needs to remember that for cash budgeting purposes:
A)the sale may be immediately posted as if it has been collected.
B)the sale should be recorded in the month it was made.
C)he/she must account for a delay between the sale and collection of proceeds.
D)such a transaction counts as a cash disbursement.

Question

Quizplus · Accepted Answer

Selling goods or services on credit means that there may be a delay between the sale and the collection of proceeds. To accurately budget for cash flow, the owner must take this delay into account and plan accordingly. Therefore, choice C is the best answer as it reflects the importance of accounting for the delay in collection when budgeting for cash.

When a Firm Sells Goods or Services on Credit,the Owner