Question

As a finance manager at AllSports Communication, Charlie worries about the firm's borrowing requirements for the upcoming year. He knows the benefit of estimating AllSports' cash disbursements and short-term investment expectations. Facing these concerns, a(n) ________ would provide Charlie with valuable information by providing a good estimation of whether the firm will need to do short-term borrowing.
A. operating budget

B. cash budget

C. capital budget

D. line item budget

Answer 1

Answer:

The correct answer is letter "B": cash budget.

Explanation:

A cash budget is a plan for the inflow and outflows of cash for a business or an individual. Cash budgets are used by all levels of a business to better manage their cash position. It is useful to identify, in the short term, possible future cash deficiency and take steps to mitigate the problem by securing a loan or aggressively pursuing unpaid accounts receivables.