In construction of a capital budget, depreciation is used to compute cash flows.   However, depreciation is not used to construct a cash budget.  Explain the difference.

Q: Capital budgeting is the decision making process used in the acquisition of long term physical…

A: It is a decision making process which is used by the firm about the acquisition of long term…

Q: Help question 20

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Q: The relationship between project cash flows, taxes and inflation.

A: Cash flows is the flow of money in or out from the business. There are two types of cash flows which…

Q: Why does capital budgeting rely on the analysis of cash flows rather than on net income

A: Capital budgeting : Capital project is a major expenditure that’s required to purchase a machinery…

Q: Is capital budgeting decisions can be reversed

A: In capital budgeting we review different projects to determine their financial feasibility and…

Q: Why are discounted cash flow methods of making capital budgeting decisions superior to othermethods?

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Q: What is the function of a cash budget? A capital budget?

A: A cash budget is a financial plan or plan of projected money receipts and payment during the period.…

Q: True or False In most capital budgeting decisions, the emphasis should be on reported earnings…

A: The given statement is false.

Q: What is linear programming for capital budgeting?

A: A linear programming model is characterized which is intended to decide the most practical financing…

Q: Explain the term capital budgeting.

A: Capital Budgeting is used in strategic decision making. Capital budgeting is a process used to…

Q: Define the term capital budgeting.

A: Capital budgeting is the planning process used by companies to determine whether an organisation's…

Q: What are the basic benefits and purposes of developing pro forma statements and a cash budget?

A: Budgeting and preparing the pro forma statements are two different accounting processes. But…

Q: Explain statement of cash flows proforma and its significance in budgeting. Provide a hypothetical…

A: The purpose of cash flow budget is to show the insight of cash inflow and outflow on a monthly basis…

Q: Explain what is meant by the time value of money, and discuss its relevance to the capital budgeting…

A: Value of money means its purchasing power. It can also be explained as the quantity of goods that…

Q: Operating cash flows rather than accounting income are listed in Table 12.1. Why do we focus on cash…

A: Answer: The main reason why we are focusing on cash flows is only because cash can be invested or…

Q: In a capital budgeting analysis, why are interest charges not deducted when a project’s cash flows…

A: Capital Budgeting:  The process to evaluate an alternative based on the estimated future benefits…

Q: Why are discounted cash flow methods of making capital budgeting decisions superior to allother…

A: Discounted cash flow: it is a valuation method. This method helps in determining the Value of a…

Q: . Float is defined as the difference between which of the following?  A.  Beginning cash…

A: In a company, it is not always necessary that the balance available in the company records matches…

Q: In construction of a cash budget, depreciation is not used.  However, it is used to compute cash…

A: Depreciation is a tax-deductible expense of the company. It is the reduction of the fixed asset…

Q: Why are interest charges not deducted when a project’s cash flows are calculated for use in a…

A: Capital budgeting analysis is useful to know which projects are profitable and which are not. There…

Q: Which of the following expenses would not appear in the cash budget? a. Depreciation expense b.…

A: Cash Budget: In cash Budget it records only cash receipts and cash payments in an particular…

Q: What is meant by the term payback period? How is this criterion sometimes used in capital budgeting?

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Q: This method consists of taking the estimated statement of income for the next period and adding or…

A: The cash flow statement (CFS) is a part of financial statement of the Company which elaborates the…

Q: In most capital budgeting decisions, the emphasis

A: The statement is false.

Q: Define Capital budgeting.

A: Capital budgeting is used by management to know  which projects will give the best return during  a…

Q: et used to

A: A cash budget is a comparison of the cash receipts and cash payments schedules to determine cash…

Q: In capital budgeting, the Payback Method suffers from the problem of: No consideration to sunk costs…

A: Traditional methods: Payback period: This method is used to calculate how many years a project will…

Q: Write a essay to explain the purpose of a cash budget and an income statement, and compare and…

A: Introduction: Cash budget can be defined as estimation of inflows & outflows for a particular…

Q: Depreciation Expense is not shown in the Cash Budget because it is a​ non-cash expense.   True or…

A: The answer is as fallows

Q: How is the estimation of relevant cash flows one of the most important parts of this…

A: Capital budgeting is the process a company follows to decide whether to purchase a fixed asset or…

Q: What two pieces of information does the payback method providethat are absent from the other capital…

A: The question is based on the concept of calculation of payback period as a capital budgeting…

Q: Why is the cash budget regarded as a primary tool in short-run financial planning? Discuss.

A: A business needs funds to run its operations. It needs money to run its day-to-day operations and to…

Q: Use an example to explain to show why capital budgeting relies on cash flows rather than net income?

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Q: All of the following are data rules associated with capital budgeting EXCEPT:   a. Include changes…

A: Capital budgeting is the planning process used to determine long term investments are worth spending…

Q: Steps In Understanding Cash Budgeting

A: Cash budget is the budget of cash receipts and cash disbursements of the business for a particular…

Q: 2. Should depreciation expense be explicitlyincluded in the cash budget? Why or why not?

A: Cash Budget: This budget gives an estimation of all the cash inflows and outflows of a business for…

Q: would appear on both the budgeted income statement and on the schedule of expected cash…

A: Non-cash expenditure doesn't involve outflow of cash.This occurs due to non-cash basis of accounting…

Q: Why should companies use a project’s cash flows rather thanaccounting income when determining a…

A: Net Present Value is the difference between the current value of cash inflow and cash outflow for a…

Q: The following are discounting techniques in capital budgeting, except?     discounted payback…

A: Solution:- Definition:- Capital budgeting is useful for making investment decisions in long term…

Q: why is the cash budget regarded as a primary tool in short term financial planning? Discuss

A: Explanation:- The cash budget is 1 of the most important instruments for working capital management…

Q: is a detailed budget of cash receipts expenditure incorporating and cash both revenue and capital…

A: Budget is always prepared for future and it estimates the future expense, revenues, receipts and…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.