Question

2.If the cash for the first quarter of the fiscal year indicates excess cash at the end of each of the first two months, how might the excess cash be used

3. Give an example of how the capital expenditures affects operating budgets

Answer 1

2.If the cash for the first quarter of the fiscal year indicates excess caslike h at the end of each of the first two months, how might the excess cash be used.

It appears that the excess cash is temporary, as the excess cash is available only for the first two months, and that it may be used up in the third month of the quarter.

Hence, it is available for investment for the first two months. The said cash can be invested in money market instruments such as Treasury bills, CDs, Commercial papers, Bank deposits, etc. Such investments are secure and liquid.

3. Give an example of how the capital expenditures affects operating budgets.

Investments made in Equipments or Plant and Machinery during the course of the year are likely to increase the production and sales. Hence, it will affect all the operating budgets such as sales budget, purchases budget. manufacturing overhead budget etc.