For which of the following reasons,management accountants usually provide for a minimum cash balance in their cash budgets?
A)Stockholders demand a minimum cash balance
B)It is an important way of effectively managing cash.
C)It provides a safety buffer for variations in estimates.
D)It makes funds available for major capital expenditures.

Question

Quizplus · Accepted Answer

Management accountants usually provide for a minimum cash balance in their cash budgets to provide a safety buffer for variations in estimates. This ensures that there is enough cash to cover unexpected expenses or fluctuations in cash flow. It is an important way of effectively managing cash and preventing a cash shortage. Stockholders do not demand a minimum cash balance, and a cash budget is not the primary method for making funds available for major capital expenditures.

For Which of the Following Reasons,management Accountants Usually Provide for a Minimum