# 4.4: Working Capital Management: Cash BudgetFirms need to forecast their cash flow. The primary tool used is the **cash budget**, which is a table that shows cash receipts, disbursements, and balances over some time period. Firms typically develop a monthly budget for annual planning, and a daily budget gives a more precise picture of the actual cash flows, which is good for scheduling actual payments on a day-by-day basis.The monthly cash budget begins with a **sales forecast** for each month and a projection of when actual collections will occur. Then, there is a forecast of materials purchases, followed by forecasted payments for materials, labor, leases, new equipment, taxes, and other expenses. The forecasted payments are then subtracted from the forecasted collections to obtain the expected net cash gain or loss for each month. This gain or loss is added to or subtracted from the beginning cash balance, and the result is the amount of cash the firm would have on hand at the end of the month if it didn't borrow or invest.**Give the correct response to the following question.**Which of the following items would **not** be included in the cash budget?

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4. 4: Working Capital Management: Cash Budget Firms need to forecast their cash flow. The primary tool used is the Select V, which is a table that shows cash receipts, disbursements, and balances over some time period. Firms typically develop a monthly budget for annual planning and a daily budget gives a more precise picture of the actual cash flows, which is good for scheduling actual payments on a day-by-day basis. The monthly cash budget begins with a ESelect: V forecast for each month and a projection of when actual collections will occur. Then there is a forecast materials purchases, followed by forecasted payments for materials, labor, leases, new equipment, taxes and other expenses. The forecasted payments are then subtracted from the forecasted collections to obtain the expected net cash gain or loss for each month. This gain or loss is added to or subtracted from the beginning cash balance, and the result is the amount of cash the firm would have on hand at the end of the month if it didn't borrow or invest. Give the correct response to the following question. Which of the following items would not be included in the cash budget? ESelect-

4. 4: Working Capital Management: Cash Budget Firms need to forecast their cash flow. The primary tool used is the Select V, which is a table that shows cash receipts, disbursements, and balances over some time period. Firms typically develop a monthly budget for annual planning and a daily budget gives a more precise picture of the actual cash flows, which is good for scheduling actual payments on a day-by-day basis. The monthly cash budget begins with a ESelect: V forecast for each month and a projection of when actual collections will occur. Then there is a forecast materials purchases, followed by forecasted payments for materials, labor, leases, new equipment, taxes and other expenses. The forecasted payments are then subtracted from the forecasted collections to obtain the expected net cash gain or loss for each month. This gain or loss is added to or subtracted from the beginning cash balance, and the result is the amount of cash the firm would have on hand at the end of the month if it didn't borrow or invest. Give the correct response to the following question. Which of the following items would not be included in the cash budget? ESelect-

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Cash budget

A cash budget is an estimate of an organization's cash flow for the future period. A cash budget forecasts future cash receipts and payments from various sources for a fiscal year. A cash budget can be created once a month or once a week to determine the organization's cash position and ensure its performance in relation to the budget. It aids in determining whether the company has enough cash and cash equivalents to meet its operational needs in the future. If cash receipts are insufficient to cover future expenses, an organization may plan to obtain funds from other sources. After estimating the sales, purchase, and capital expenditure budgets for the year, management develops a cash budget. These budgets are created to ensure that an organization's cash flow is managed. It is important to note that only cash transactions are recorded when actual cash enters and exits an organization.

Question

# 4.4: Working Capital Management: Cash Budget

Firms need to forecast their cash flow. The primary tool used is the **cash budget**, which is a table that shows cash receipts, disbursements, and balances over some time period. Firms typically develop a monthly budget for annual planning, and a daily budget gives a more precise picture of the actual cash flows, which is good for scheduling actual payments on a day-by-day basis.

The monthly cash budget begins with a **sales forecast** for each month and a projection of when actual collections will occur. Then, there is a forecast of materials purchases, followed by forecasted payments for materials, labor, leases, new equipment, taxes, and other expenses. The forecasted payments are then subtracted from the forecasted collections to obtain the expected net cash gain or loss for each month. This gain or loss is added to or subtracted from the beginning cash balance, and the result is the amount of cash the firm would have on hand at the end of the month if it didn't borrow or invest.

**Give the correct response to the following question.**

Which of the following items would **not** be included in the cash budget?

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2. State whether the following sentences are TRUE or FALSE ASTARINS # Statements 1 The production budget is typically prepared prior to the sales budget. One benefit of budgeting is that it coordinates the activities of the entire organization. The master budget is a network consisting of many separate budgets that are interdependent. Sales forecasts are drawn up after the cash budget has been completed because only then are the funds available for marketing known. 5 A sales budget is a detailed schedule showing the expected sales for the budget period; typically, it is expressed in both dollars and units of product. 2 3 4 TRUE or FALSE 3. Which of the following represents the normal sequence in which the indicated budgets are prepared? A. Direct Materials, Cash, Sales B. Production, Cash, Income Statement C. Sales, Balance Sheet, Direct Labor D. Production, Manufacturing Overhead, Sales 1280 4. Which of the following represents the correct order in which the indicated budget documents…
You have been hired by the company LA PLANEACIÓN, S.A., for your track record in Cash Management and for being a CETYS student. With the following information, prepare a Cash Budget by the input-output method: (IMAGE) ( I think it is easy to understand, especially for a bartleby expert.) The budgeted monthly sales for the following fiscal year are: January - 500000February - 600000March - 725000April - 650000May - 700000June - 600000July - 500000August - 550000 Sales are made: 35% cash and 65% on credit which are collected in the following month. The outstanding receivables from 2020 are on the balance sheet. The amount of bad debts is insignificant. Purchases are made two months in advance of what is to be sold. The purchase conditions with suppliers are: 40% of purchases are paid in cash, 30% in the month following the purchase and 30% after two months. The balance payable on the account at December 31 consists of credit purchases in November and credit purchases in December. Cost…
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