The correct answer is A. Capital cost of a new collection vehicle.
A cash budget is a financial statement that projects a company’s future cash inflows and outflows. It is used to help a company manage its cash flow and ensure that it has enough cash on hand to meet its obligations.
The capital cost of a new collection vehicle is not a cash flow item. It is a capital expenditure, which is an investment in an asset that will have a useful life of more than one year. Capital expenditures are not included in cash budgets because they are not expected to affect cash flow in the current period.
The other options, B, C, and D, are all cash flow items. They are expenses that the refuse disposal department will incur in the current period. These expenses will affect the department’s cash flow and should be included in the cash budget.
Here is a more detailed explanation of each option:
- Option A: Capital cost of a new collection vehicle. This is a capital expenditure, which is an investment in an asset that will have a useful life of more than one year. Capital expenditures are not included in cash budgets because they are not expected to affect cash flow in the current period.
- Option B: Depreciation of the machinery. Depreciation is an accounting expense that is used to allocate the cost of an asset over its useful life. It is not a cash flow item and should not be included in a cash budget.
- Option C: Operatives wages. This is an expense that the refuse disposal department will incur in the current period. It will affect the department’s cash flow and should be included in the cash budget.
- Option D: Fuel for the collection vehicles. This is an expense that the refuse disposal department will incur in the current period. It will affect the department’s cash flow and should be included in the cash budget.