A very important role of the cash budget is to Determine how to finance dividend paymentsPlan for appropriate financing needsDetermine the optimal source of financing for the organization’s operationsHelp identify credit customers who might not pay

Cash budget - Cash budget helps the business in managing its cash flows. it also helps in planning…

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Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter9: Cost Accounting For Service Businesses, The Balanced Scorecard, And Quality Costs

Section: Chapter Questions

Problem 11Q: Explain how a budgeted income statement for a service business may be used for both planning and...

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A very important role of the cash budget is to

Determine how to finance dividend payments

Plan for appropriate financing needs

Determine the optimal source of financing for the organization’s operations

Help identify credit customers who might not pay

Definition Definition Estimate of an organization's cash flow for a 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.

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