An income statement differs from a cash flow budget in the following ways: A. A cash flow budget does not account for non-cash expenses B. A cash flow budget includes full cost and sale value of capital assets C. A cash flow budget includes non-farm income, loan receipts, and debt payments. D. All of the above

An income statement differs from a cash flow budget in the following ways: A. A cash flow budget does not account for non-cash expenses B. A cash flow budget includes full cost and sale value of capital assets C. A cash flow budget includes non-farm income, loan receipts, and debt payments. D. All of the above

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

An income statement differs from a cash flow budget in the following ways:

A. A cash flow budget does not account for non-cash expenses

B. A cash flow budget includes full cost and sale value of capital assets

C. A cash flow budget includes non-farm income, loan receipts, and debt payments.

D. All of the above

Definition Definition Net amount of cash that an entity receives and expends over the course of a given period. For a business to continue operating, positive cash flows are required, and they are also necessary to produce value for investors. Investors in particular prefer to see growing cash flows even after capital expenditures have been paid for (which is known as free cash flow).

Expert Solution

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Answer is Option D All of the above.

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