15RQ - Horngren'S Financial And Managerial Accounting

Question

What are the three sections of the cash budget?

Step-by-Step Solution

Answer

Cash receipts, cash payments, and short-term financing are three sections of the cash budget.

Step 1: Meaning of Cash budget

The Cash budget is a budget prepared to estimate the cash receipts and payments for a particular period of a company.

Step 2: Following are the three sections of the cash budget

1. Cash receipts: Mainly, the cash is received from the customers.
2. Cash payments: A company can pay many payments to purchase direct material, direct labor costs, manufacturing overheads, etc.
3. Short-term financing: It provides the details related to the expected repayments and interest payments on the short-term financing of the company.