Answer to Question #259485 in Other for Vickie

Question

In the context of the budgetary control explain the main functions and importance of a cash budget

Answer 1

The cash budget is an estimate of cash receipts and their payment during a future period of time. It deals with other budgets such as materials, labor, overheads, and research and development. The cash budget is an indicator of the probable cash inflows and outflows.

The main functions of the cash budget are the following:

• Forecasting of cash requirement.
• Cash position.
• Controlling cash expenditure.
• Expansion schemes.
• Sound dividend policy.