10) budgeting for cash

10. Budgeting for cash Which of the following statements are true with regard to a cash budget? Check all that apply. The single biggest disadvantage of the cash budget is that it is not useful in identifying a firm's potential cash shortages. Cash budgets can be used to plan, coordinate, and control a firm's activities. Annual budgeting information usually provides sufficient information to manage most companies. A cash budget provides information about a company's ability to repay its loans or meet its other obligations. Assume that Lincoln Co. has the following accounts receivable pattern: Month of sale 80% Month following the sale 20% All sales are on credit. If sales in November and December are budgeted to be $900,000 and $1.000,000, respectively, the cash expected to be collected in December is s Co. purchases raw materials on account. Lincoin's poloy is to take advantage of discounts and pay in the month following the purchase. Some of Lincoin's suppliers do not offer discounts and require payment within the month of purchase. Other suppliers sell on sredit terms of 2/to net 30, which means that Lincoin can take a2 discount and pay 98% of the invoiced amount if the invoice is paid within 10 days. If the invoice is not paid within 30 days of making the purchase, then Lincoln must pay the f -mount 100%) of the invoice lects not to take advantage of the discount. then it soood tinencual proctice to delay the payment of an invoice unti . Remember, it Lind oin