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 a time delay between the sale and the collection of cash. Therefore, for cash budgeting purposes, the owner must account for this delay and plan accordingly. The sale should be recorded in the month it was made, but the cash from the sale may not be collected until a future month. This delay needs to be taken into consideration for accurate cash budgeting. Hence option C is the correct choice.

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