Cash budget indicates timings of short-term borrowing
Cash budget is based on accrual concept
Cash budget is based on cash flow concept
Repayment of principal amount of law is shown in cash budget
Answer is Right!
Answer is Wrong!
The correct answer is: D. Repayment of principal amount of loan is shown in cash budget.
A cash budget is a financial statement that projects a company’s future cash inflows and outflows. It is used to help businesses manage their cash flow and avoid running out of money.
A cash budget is based on the cash flow concept, which means that it only includes cash receipts and disbursements. The repayment of principal amount of a loan is a non-cash item, so it is not included in a cash budget.
Here is a brief explanation of each option:
- Option A: Cash budget indicates timings of short-term borrowing. This is true. A cash budget can be used to determine when a company needs to borrow money to cover its short-term cash shortfalls.
- Option B: Cash budget is based on accrual concept. This is false. A cash budget is based on the cash flow concept, which means that it only includes cash receipts and disbursements.
- Option C: Cash budget is based on cash flow concept. This is true. A cash budget is based on the cash flow concept, which means that it only includes cash receipts and disbursements.
- Option D: Repayment of principal amount of loan is shown in cash budget. This is false. The repayment of principal amount of a loan is a non-cash item, so it is not included in a cash budget.