Which of the following statements concerning the cash budget is CORRECT? a. Cash

Question

Which of the following statements concerning the cash budget is CORRECT?

a. Cash budgets do not include financial items such as interest and dividend payments. b. Depreciation expense is not explicitly included, but depreciation's effects are reflected in the estimated tax payments. c. Capital budgeting decisions have no effect on the cash budget until projects go into operation and start producing revenues. d. Cash budgets do not include cash inflows from long-term sources such as the issuance of bonds. e. Changes that affect the DSO do not affect the cash budget.

Explanation / Answer

Cash Budget are the budgeted of the cash inflow and outflow from the projec .

A) Cash budget include the interest and dividend becasue it carries cash inflow and outfolw so the given statement is false.

C) No, this statement is also not correct because there is other cash outflow before the start of project. So this option is also incorrect.

D) Cash budget include the longg term sources such as issuance of beondss, So the given statement is false

E) DSO is depend on the collection of outstanding from the customers, So the given statement is False.

B) Depreciation expenses is the expenses which are allowed in the income tax but in the actuallity there is no cash outflow, so depreciation's effects are reflected in the estimated tax payments. So this statement is correct.

Answer = Option B =  Depreciation expense is not explicitly included, but depreciation's effects are reflected in the estimated tax payment

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