[amp_mcq option1=”It helps in cash management” option2=”It helps in preparing balance sheet” option3=”It is legally compulsory” option4=”Both A and C” correct=”option1″]<\/p>\n
The correct answer is: A. It helps in cash management.<\/strong><\/p>\n 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 can be prepared for a specific period of time, such as a month or a quarter, or it can be prepared for a longer period of time, such as a year.<\/p>\n There are several reasons why a business might prepare a cash budget. First, a cash budget can help a business to identify potential cash shortfalls. This allows the business to take steps to avoid these shortfalls, such as borrowing money or cutting costs. Second, a cash budget can help a business to identify potential cash surpluses. This allows the business to invest the surpluses or use them to pay down debt. Third, a cash budget can help a business to track its actual cash flows against its projections. This allows the business to identify any problems with its cash management and to take corrective action.<\/p>\n A cash budget is a valuable tool for any business. It can help businesses to manage their cash flow, avoid running out of money, and make sound financial decisions.<\/p>\n Option B is incorrect because a cash budget does not help in preparing a balance sheet. A balance sheet is a financial statement that shows a company’s assets, liabilities, and equity at a specific point in time. A cash budget is a financial statement that projects a company’s future cash inflows and outflows.<\/p>\n Option C is incorrect because a cash budget is not legally compulsory. There is no law that requires businesses to prepare a cash budget. However, many businesses choose to prepare a cash budget because it is a valuable tool for managing cash flow.<\/p>\n","protected":false},"excerpt":{"rendered":" [amp_mcq option1=”It helps in cash management” option2=”It helps in preparing balance sheet” option3=”It is legally compulsory” option4=”Both A and C” correct=”option1″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[952],"tags":[],"class_list":["post-43164","post","type-post","status-publish","format-standard","hentry","category-costing","no-featured-image-padding"],"yoast_head":"\n