MCQ on Cash Budget | Cash Budget MCQs | 2021 | 15 Questions

 MCQ on Cash Budget
Multiple choice questions and answers

1. Cash budget is a part of:

a) Functional budget

b) Financial Budget

c) Master budget

d) None of the above

Ans: b) Financial Budget

2. While preparing cash budget which of the following items would not be included?

a) Depreciation

b) Credit sales

c) Loss on sale of assets

d) All of the above

Ans: d) All of the above

3. Cash budget is prepared on which basis?

a) Cash basis

b) Accrual basis

c) Hybrid basis

d) None of the above

Ans: a) Cash basis

4. Cash budget is prepared by:

a) Purchase manager

b) Sales manager

c) Finance Manager

d) Chief executive officer

Ans: c) Finance Manager

5. Which one of the following is true about cash budget?

a) It indicates cash excess or cash shortages.

b) Cash budget is closely related to other functional budgets.

c) It establishes a sound basis for obtaining credit.

d) All of the above

Ans: d) All of the above

6. Cash budget is prepared from:

a) Functional budgets

b) Financial budgets

c) Capital expenditure budget

d) All of the above

Ans: d) All of the above

7. Cash budget is _____ in nature

a) Short term

b) Long term

c) Mid-term

d) None of the above

Ans: a) Short term

8. Cash budget is based on:

a) Sales forecasts

b) Expenses budgets

c) Capital expenditure budget

d) All of the above

Ans: d) All of the above

9. Cash budget is prepared because it:

a) Indicates probable cash position as a result of planned operations.

b) It indicates in advance cash excess or shortages.

c) It indicates the need of short term borrowings.

d) All of the above

Ans: d) All of the above

10. Cash budget is expressed in:

a) Monetary terms

b) Physical terms

c) Both monetary and physical terms

d) All of the above

Ans: a) Monetary terms

11. Which one of the following is not true about cash budget?

a) Cash budget indicates the balance of cash at the end of every budget period.

b) Cash budget does not include depreciation and credit sales.

c) It ensures balance between liquidity and profitability.

d) Sales budget is prepared on the basis of cash budget.

Ans: d) Sales budget is prepared on the basis of cash budget.

12. Cash budget is a summary of:

a) Estimated cash receipts and cash payments

b) Estimated expenses and incomes

c) Estimated purchases and sales

d) All of the above

Ans: a) Estimated cash receipts and cash payments

13. Cash budget is a useful tool for:

a) Planning and control of working capital

b) Liquidity management

c) Controlling cash expenditure

d) All of the above

Ans: d) All of the above

14. Which of the following are methods of preparing cash budget?

a) Receipts and Payments Method

b) Adjusted Profit and Loss method

c) Funds flow method

d) All of the above

Ans: d) All of the above

15. Adjusted profit and loss method of cash budget is also known as:

a) Funds flow statement

b) Cash flow statement

c) Ratio analysis

d) Comparative statements

Ans: b) Cash flow statement

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