The textbook states that the cash budget is one of the mostimportant parts of...

90.2K

Verified Solution

Question

Accounting

The textbook states that the cash budget is one of the mostimportant parts of the master budget. There are several reasonslisted as to why a cash budget is considered to be this important;I would like your thoughts as to why you consider the cash budgetto be this important. How does the granting of credit to customers(and to your company from suppliers) affect your answer? Whathappens when you face a cash shortage? Is there something that canbe "built in" the budget that considers such a situation andincorporates it into the master budget? What happens to the cashbudget when you face an unforeseen emergency requiring cash?

Answer & Explanation Solved by verified expert

3.7 Ratings (638 Votes)

Here one thing to see that is importance of cash budget which is important part of Master Budget Cash budget basically shows inflowoutflow of cash as well as balance of cash required during the period Somehow we underestimate cash budget importance because every organization is having cash accordingly to their requirement But one thing to understand that every business should plan its funds in such a way so that it can earn maximum There should not be any surplus cash in business or if any then that should be invested to earn additional income and if there is any shortage of cash See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

In: AccountingThe textbook states that the cash budget is one of the mostimportant parts of the...The textbook states that the cash budget is one of the mostimportant parts of the master budget. There are several reasonslisted as to why a cash budget is considered to be this important;I would like your thoughts as to why you consider the cash budgetto be this important. How does the granting of credit to customers(and to your company from suppliers) affect your answer? Whathappens when you face a cash shortage? Is there something that canbe "built in" the budget that considers such a situation andincorporates it into the master budget? What happens to the cashbudget when you face an unforeseen emergency requiring cash?