“The principal purpose of the cash budget is to see how much cash the company will have in the bank at the end of the year”. Do you agree? Explain.

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It is incorrect to assume that the cash budget aims to see what amount of cash the company holds at the end of the year. A cash budget is typically performed each month, with the budget period being a quarter or half of a year.

This budget is a forecast of monthly cash flows to represent the balance at the end of the month. Thus, the principal purpose of the cash budget is cash control, which involves matching receivables and payables and having a preferred profit every month.

If it is determined that the payouts for a given month cannot be met with the given invoices, the budget informs the company ahead of time, by a negative value, that additional funds must be brought in.

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Academic.Tips. (2023) '"The principal purpose of the cash budget is to see how much cash the company will have in the bank at the end of the year". Do you agree? Explain'. 10 May.

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Academic.Tips. (2023, May 10). "The principal purpose of the cash budget is to see how much cash the company will have in the bank at the end of the year". Do you agree? Explain. https://academic.tips/question/the-principal-purpose-of-the-cash-budget-is-to-see-how-much-cash-the-company-will-have-in-the-bank-at-the-end-of-the-year-do-you-agree-explain/

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Academic.Tips. 2023. ""The principal purpose of the cash budget is to see how much cash the company will have in the bank at the end of the year". Do you agree? Explain." May 10, 2023. https://academic.tips/question/the-principal-purpose-of-the-cash-budget-is-to-see-how-much-cash-the-company-will-have-in-the-bank-at-the-end-of-the-year-do-you-agree-explain/.

1. Academic.Tips. ""The principal purpose of the cash budget is to see how much cash the company will have in the bank at the end of the year". Do you agree? Explain." May 10, 2023. https://academic.tips/question/the-principal-purpose-of-the-cash-budget-is-to-see-how-much-cash-the-company-will-have-in-the-bank-at-the-end-of-the-year-do-you-agree-explain/.

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Academic.Tips. ""The principal purpose of the cash budget is to see how much cash the company will have in the bank at the end of the year". Do you agree? Explain." May 10, 2023. https://academic.tips/question/the-principal-purpose-of-the-cash-budget-is-to-see-how-much-cash-the-company-will-have-in-the-bank-at-the-end-of-the-year-do-you-agree-explain/.

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""The principal purpose of the cash budget is to see how much cash the company will have in the bank at the end of the year". Do you agree? Explain." Academic.Tips, 10 May 2023, academic.tips/question/the-principal-purpose-of-the-cash-budget-is-to-see-how-much-cash-the-company-will-have-in-the-bank-at-the-end-of-the-year-do-you-agree-explain/.

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