What is the main purpose of a cash budget?
Correct answer: A. To estimate future cash receipts and payments
- A. To estimate future cash receipts and payments
- B. To calculate the depreciation of fixed assets
- C. To determine the market value of ordinary shares
- D. To record only completed credit sales
Explanation
A cash budget forecasts expected cash inflows, cash outflows and the resulting cash balance over a future period. It helps identify possible shortages or surpluses. Depreciation and share valuation are separate financial tasks.
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About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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