Which item is included as a cash inflow in a cash budget?

Which item is included as a cash inflow in a cash budget?

• A. Cash receipts from customers
• B. Non-cash depreciation
• C. Accruals for wages not yet paid
• D. Amortization

Answer: (A)

In a cash budget, you focus on actual cash movements. Only items that involve real cash coming into the business are included as cash inflows. Cash receipts from customers represent money received in cash, so they clearly increase the cash balance and are counted as an inflow. Non-cash depreciation and amortization don’t involve any cash changing hands, so they don’t appear as inflows (they affect profit and accounting values, not cash). Accruals for wages not yet paid reflect expenses incurred but not yet paid; the cash outflow occurs when the wages are paid, not when the accrual is recorded, so this isn’t an inflow either.

In a cash budget, you focus on actual cash movements. Only items that involve real cash coming into the business are included as cash inflows. Cash receipts from customers represent money received in cash, so they clearly increase the cash balance and are counted as an inflow.

Non-cash depreciation and amortization don’t involve any cash changing hands, so they don’t appear as inflows (they affect profit and accounting values, not cash). Accruals for wages not yet paid reflect expenses incurred but not yet paid; the cash outflow occurs when the wages are paid, not when the accrual is recorded, so this isn’t an inflow either.