Which of the following are reasons to generate a pro forma cash budget on a monthly basis?
A) Sales are recognized as income when the sale is made.
B) A business can monitor the actual cash on hand.
C) An income statement indicates a profit but the budget may indicate a loss.
D) All of the above.

Question

Quizplus · Accepted Answer

A pro forma cash budget helps in understanding the actual cash position by recognizing sales when the cash is received (not just when the sale is made), allowing a business to monitor its cash on hand closely, and highlighting discrepancies between profit shown on an income statement and actual cash flow, which can indicate a loss not visible on the income statement.

Which of the Following Are Reasons to Generate a Pro