Which of the following is the best reason for preparing budgets for governmental entities on the cash basis?
A)Cash basis budgeting helps to achieve interperiod equity.
B)Cash basis budgeting helps to ensure that the government will receive no more in revenues than it is required to disburse.
C)Cash basis budgeting helps a government plan to have cash on hand to pay bills
D)Cash basis budgeting more accurately reflects the economic impact of fiscal activities.

Question

Quizplus · Accepted Answer

Cash basis budgeting helps a government plan to have cash on hand to pay bills. This is because cash basis budgeting only records transactions when cash is received or disbursed, allowing for a more accurate forecast of cash flow needs. This is particularly important for governmental entities, as they have a responsibility to ensure that they have enough cash on hand to pay their bills in a timely manner.

Which of the Following Is the Best Reason for Preparing