Question

When a firm sells goods or services on credit, the owner needs to remember that for cash budgeting purposes ________.
Select one:
a. the sale may be immediately posted as if it has been collected
b. such a transaction counts as a cash disbursement
c. she/he must account for a delay between the sale and the actual collection of the proceeds
d. the sale should be recorded in the month it was made

Answer 1

Answer:

The correct option is c. she/he must account for a delay between the sale and the actual collection of the proceeds

Explanation:

As in the given question, it is mentioned that the credit sale is made, so the owner would remember the delay between the sale and the actual collection so that he knows the gap between these two.

Moreover, for cash budgeting purposes, it is necessary to remember when the owner received the cash and the date on which credit sale was made.

So, all other options are incorrect because it doesn't make any comparison between these two thing which is important for cash budgeting purposes.

Hence, The correct option is c. she/he must account for a delay between the sale and the actual collection of the proceeds