Which of the following information is NOT required when calculating the total cash disbursements of an annual cash budget? A. Uncollectable bad debt expenses from customers B. Purchase for raw materials C. Tax payment instalments D. Insurance expenses for the production facilities E. Employee salaries
Question
Which of the following information is NOT required when calculating the total cash disbursements of an annual cash budget? A. Uncollectable bad debt expenses from customers B. Purchase for raw materials C. Tax payment instalments D. Insurance expenses for the production facilities E. Employee salaries
Solution
The correct answer is A. "Uncollectable bad debt expenses from customers"
Uncollectable bad debt expenses from customers are not a cash disbursement. They represent an amount that the company expected to receive in cash but did not because the customer failed to pay. This is an accounting adjustment and does not involve an actual outflow of cash.
The other options (B, C, D, E) are all cash disbursements as they involve actual outflows of cash from the company.
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