Preparation of the cash budget starts ________.
A)with net income and makes adjustments for all the items that are not cash
B)by converting every number on the income statement to its cash amount
C)by estimating the sources of cash and the uses of cash
D)with cash collected from customers

Question

Quizplus · Accepted Answer

The preparation of the cash budget involves estimating the sources and uses of cash, including cash collected from customers, cash paid to suppliers, operating expenses, capital expenditures, and debt service payments. It is important to consider the timing of these cash flows and any cash reserves that may be necessary to cover unexpected expenses or shortfalls. While net income and the income statement provide important information, they are not sufficient for preparing the cash budget without adjustments and additional information.

Preparation of the Cash Budget Starts ________