Discuss the five basic steps to establishing a cash budget for a business
What will be an ideal response?
Answer: The cash budgeting procedure outlined in this chapter tracks the flow of cash through the business and enables the owner to project cash surpluses and cash deficits at specific intervals. The five steps in creating a cash budget are as follows: determining an adequate minimum cash balance, forecasting sales, forecasting cash receipts, forecasting cash disbursements, and determining the end-of-month cash balance.
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In December 2011, B. Rich worked for Payless, Inc and earned $10,000. Federal income tax withholding is 20%. The FICA rate is 6.2% and the Medicare tax is 1.45%. How much cash will Payless pay the government for FICA because of B
Rich's December earnings? A) $1,240 B) $2,765 C) $765 D) $1,530
The comparative balance sheets of Friends, Inc. show a net increase in accounts receivable of $650 and a net decrease in inventory of $500. To determine net cash flow from operating activities under the indirect method, net income should be:
A. Reduced by $650. B. Increased by $650. C. Reduced by $150. D. Increased by $150.