Question :
Which of the following statements states the difference between a cash flow statement and a cash budget?
Option 1:
The cash flow statement shows the movement of cash whereas the cash budget shows no cash movement
Option 2:
The cash flow statement is a part of the cash budget
Option 3:
Both 1 & 2
Option 4:
The cash flow statement shows the cash movement of the historical period whereas the cash budget shows the cash movement of the future period
Correct Answer:
The cash flow statement shows the cash movement of the historical period whereas the cash budget shows the cash movement of the future period
Solution : The cash budget predicts the movement of cash throughout the predicted period (i.e. future period) whereas the cash flow statement analyses cash transactions that have actually occurred.
Hence the Correct answer is option 4.
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