[amp_mcq option1=”Cash budget indicates timings of short-term borrowing” option2=”Cash budget is based on accrual concept” option3=”Cash budget is based on cash flow concept” option4=”Repayment of principal amount of law is shown in cash budget” correct=”option4″]
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.