MANAGEMENT

Detailed explanation-1: -The cash budget is comprised of two main areas, which are Sources of Cash and Uses of Cash. The Sources of Cash section contains the beginning cash balance, as well as cash receipts from cash sales, accounts receivable collections, and the sale of assets.

Detailed explanation-2: -6) Cash planning involves the preparation of a firm’s cash budget. Without adequate cash-regardless of the level of profits-any firm could fail. 7) Cash budgets and pro forma statements are useful not only for internal financial planning but also are routinely required by the Internal Revenue Service (IRS).

Detailed explanation-3: -Therefore, the head of the finance function – the chief financial officer, controller or senior accountant – manages the company’s cash budget.

Detailed explanation-4: -As a planning device, cash budget helps the finance manager to know in advance the cash position of the firm in different time periods. The cash budget indicates in which months there will be cash surfeit and in which months the firm will experience cash drain and by how much.