The 'Cash Budget' primarily helps in: MCQ with Answer and Explanation

The 'Cash Budget' primarily helps in:
A. Profit planning
B. Capital expenditure decisions
C. Determining cash requirements
D. Sales planning
Answer: Option C
Solution (By JKSSB Mock Tests)
Cash budget forecasts cash receipts and payments to ascertain cash surplus or deficit.

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Practice More Accountancy and Book Keeping Questions

Question #1
Under the Income Tax Act, the deduction under Section 80D for health insurance premiums paid for self, spouse, and dependent children is:
A. ₹75,000 for individuals below 60 years
B. ₹25,000 for senior citizens
C. ₹50,000 for individuals below 60 years
D. ₹25,000 for individuals below 60 years

Correct Answer: Option D


Explanation:
Section 80D allows a deduction of up to ₹25,000 for health insurance premiums paid for self, spouse, and dependent children (if below 60 years). For senior citizens, the limit is ₹50,000.

Question #2
S1: Operating leverage measures the impact of fixed costs on operating profit. S2: Financial leverage measures the impact of fixed interest costs on earnings per share. Which statement(s) is/are correct?
A. S1 only
B. S2 only
C. Both S1 and S2
D. Neither S1 nor S2

Correct Answer: Option C


Explanation:
Operating leverage arises from fixed operating costs and affects EBIT. Financial leverage arises from fixed financial charges (interest) and affects EPS. Both statements correctly define the respective leverages.

Question #3
Contingent liabilities are shown as a footnote to the balance sheet to comply with which accounting convention?
A. Materiality
B. Full Disclosure
C. Conservatism
D. Consistency

Correct Answer: Option B


Explanation:
Full disclosure requires all significant information to be completely and fairly disclosed, including contingent liabilities via footnotes.