Firms need to forecast their cash flow. The primary tool used is the ________, which is a table that shows cash receipts, disbursements, and balances over some time period. Firms typically develop a monthly budget for annual planning and a daily budget gives a more precise picture of the actual cash flows, which is good for scheduling actual payments on a day-by-day basis.

Fill-in options: Income Statement/ Cash Budget/ Aging Schedule

The monthly cash budget begins with a(n) _______ forecast for each month and a projection of when actual collections will occur. Then there is a forecast of materials purchases, followed by forecasted payments for materials, labor, leases, new equipment, taxes and other expenses. The forecasted payments are then subtracted from the forecasted collections to obtain the expected net cash gain or loss for each month. This gain or loss is added to or subtracted from the beginning cash balance, and the result is the amount of cash the firm would have on hand at the end of the month if it didn't borrow or invest.

Fill-in Options: Earnings/ Sales/ Cash

Give the correct response to the following question.

Which of the following items would not be included in the cash budget?

__________

Fill-in Options: Bad Debt Expense/ Interest Expense on loans/ Tax Payments/ Depreciation Expense/ Payments for materials