Question

Which of the following are considered cash disbursements?

Select one:

A. Direct materials purchased on account

B. Accrued interest

C. Proceeds from stock sales

D. Sale of investments

E. Tax payments

Which of the following are not advantages of budgeting?

Select one:

A. It helps management to get out of just doing things the same way and notice what can be improved.

B. It helps a company achieve their long-range goals.

C. It can be used for performance evaluation.

D. It gives greater control to lower management and lets each department define their own objectives.

E. None of the above are advantages of budgeting.

Answer 1

Solution:

Part 1 --- The correct option is E. Tax payments

Cash disbursement means outflow of cash from the business. Payment of Tax is cash disbursement. The other options given are not involve any cash outflow. Hence the correct option is E. Tax payments

Part 2 – The correct option is D. It gives greater control to lower management and lets each department define their own objectives.

Budgeting is the process of creating a plan and strategy as per the requirement of management. It may be for expenses or revenue or cash. It is used to evaluate the performance of business and helps management to achieve their goal.

Hence, the correct option is D.