When a firm sells goods or services on credit, the owner needs to remember that for cash budgeting purposes ________.

Question

Quizplus · Accepted Answer

When a firm sells goods or services on credit, there is likely to be a delay between the sale and the actual collection of the proceeds. This means that cash budgeting must account for the delay and not immediately post the sale as if it has been collected. Instead, the sale should be recorded in the month it was made, and the delay between the sale and collection should be taken into account when budgeting for cash flows. Therefore, option C is the correct answer.

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