ACCA Applied Knowledge · Management Accounting · Budget preparation
Which one of the following items would be included in a cash budget?
Proceeds from selling a non-current asset belong in the cash budget because they are an actual cash inflow. Depreciation, provisions for irrecoverable receivables and absorbed overheads are non-cash accounting adjustments, so they are excluded from cash forecasts.
- AProceeds from the sale of a non-current assetCorrect
- BDepreciation of production machinery
- CProvision for irrecoverable receivables
- DAbsorbed fixed overheads
Explanation
A cash budget records only actual cash inflows and outflows. Asset sale proceeds are a cash inflow. Depreciation, provisions and overhead absorption are non-cash accounting entries.
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