Question

Which of the following statements concerning the cash budget is NOT CORRECT?

Group of answer choices

Cash budgets include financial items such as interest and dividend payments.

Depreciation expense is not explicitly included, but depreciation's effects are reflected in the estimated tax payments.

Cash budgets do not include cash inflows from long-term sources such as the issuance of bonds.

Capital budgeting decisions have no effect on the cash budget until projects go into operation and start producing revenues.

Answer 1

Hi

in the cash budget, budget done for cash inflows and cash outflows.

Option 1) Since interest and dividends payment are cash outflow hence these should get included in cash budget

Option 2) Depreciation is a non cash expense, but depreciation effects goes to estimated tax payments. hence option 2 is correct

Option 3) Cash budget include all types of cash inflows and outflows hence cash from bond should also get included in cash budget hence third statemen is not correct.

Option 4 is also not correct.

hence option 3 and 4 are not correct here.

Thanks