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Borrowing and repayments appear on a cash budget but not on an operating budget because they...

Borrowing and repayments appear on a cash budget but not on an operating budget because they do not directly affect liquidity. True False

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Answer #1

The below statement is False.

False: Borrowing and repayments appear on a cash budget but not on an operating budget because they do not directly affect liquidity.

Reason: Cash budgets are directly related to liquidity analysis and planning. Borrowing and repayment does impact liquidity hence the statement appears to be false.

The operating budget excludes capital expenditures items i.e. borrowing and repayments. Operating budget is related to income and expense (P&L) statement hence, they don’t cover capital expenditures items.

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