Which of the following would be included in a cash budget?
Click on the arrows to vote for the correct answer
A. B. C. D.B
A cash budget is a financial planning tool that helps businesses to forecast their cash inflows and outflows over a specific period, usually a month or a year. It is an important tool that helps businesses to manage their cash flow effectively and make informed decisions.
To prepare a cash budget, the following items would typically be included:
Cash receipts: This refers to the expected cash inflows during the budget period. This may include cash sales, accounts receivable collections, loans, and other sources of cash.
Cash disbursements: This refers to the expected cash outflows during the budget period. This may include payments for inventory, rent, utilities, wages, taxes, and other expenses.
Beginning cash balance: This refers to the cash balance at the beginning of the budget period.
Ending cash balance: This refers to the expected cash balance at the end of the budget period.
With this in mind, let's review the answer choices:
A. Depreciation charges: Depreciation charges are non-cash expenses that represent the decline in value of a company's assets over time. Since it does not represent cash inflows or outflows, it would not be included in a cash budget.
B. Dividends: Dividends represent cash payments made to shareholders. While they may be important to the overall financial health of the business, they would not be included in a cash budget as they do not represent cash inflows or outflows for the business.
C. Patents: Patents represent intangible assets that give a company the exclusive right to use and sell a particular invention. While they may be important to the overall value of the business, they do not represent cash inflows or outflows and would not be included in a cash budget.
D. Amortization: Amortization refers to the process of spreading the cost of an intangible asset over its useful life. Like depreciation, it does not represent cash inflows or outflows and would not be included in a cash budget.
Therefore, the correct answer would be none of the above.