Question

When you examine Huron’s combined cash budget, you also notice something incorrect. Which of the following...

When you examine Huron’s combined cash budget, you also notice something incorrect. Which of the following facts would you flag for the company’s accountant to follow-up on?

A.

The company has indicated that seems to already know the months in which it will need to borrow cash from the bank.
B.

Huron uses the beginning cash balance from the previous month to determine the ending cash balance for the following month.
C.

The company has added the beginning cash balance from January to the expected cash collections for the month to calculate the total cash available.
D.

Huron calculates its interest expense by multiplying the amount of the loan by the number of months they had the loan, and then by the monthly interest rate.
E.

Huron’s combined cash budget includes both cash collections and cash disbursements portions.
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Answer #1

Solution:

The facts that i would like to flag for the company’s accountant to follow-up on is "Huron uses the beginning cash balance from the previous month to determine the ending cash balance for the following month."

Beginning cash balance from the previous month cannot be used to calculate current month cash ending balance. Previous month ending cash balance is used as current month beginning cash balance and ending cash balance is calculated.

Hence option B is correct.

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