Which one of the following statements is correct concerning the cash balance of a firm?
A) Most firms attempt to maintain a zero cash balance at all times.
B) The cumulative cash surplus shown on a cash budget is equal to the ending cash balance plus the minimum desired cash balance.
C) Most firms attempt to maximize the cash balance at all times.
D) A cumulative cash deficit on a cash budget indicates the need to acquire additional funds.
E) The ending cash balance must equal the minimum desired cash balance.

Question

Quizplus · Accepted Answer

A cumulative cash deficit on a cash budget indicates that the firm's outflows exceed its inflows for the period, suggesting the need for additional funding to cover the shortfall. This is a fundamental aspect of cash flow management, ensuring that the firm has enough liquidity to meet its obligations.

Which One of the Following Statements Is Correct Concerning the Cash