Major differences between a cash budget and a pro forma income statement include
A) The cash budget includes payments and collections that will not occur until the following period.
B) The emphasis is on cash collections for sales and cash payments for expenses.
C) The cash budget includes some items that do not appear on the income statement such as dividend payments.
D) Both B and C.

Question

Quizplus · Accepted Answer

A cash budget focuses on cash inflows and outflows, including collections and payments for the current period as well as those that may occur in the future. The emphasis is on cash transactions, whereas a pro forma income statement focuses on projected revenues and expenses, regardless of when they will be paid or collected. In addition, the cash budget may include items such as dividend payments or capital expenditures, which do not appear on the income statement. Therefore, both B and C are major differences between a cash budget and a pro forma income statement.

Major Differences Between a Cash Budget and a Pro Forma