The main source of cash in a cash budget is collection on ac

The main source of cash in a cash budget is collection on accounts receivable.

Solution

The statement is “TRUE”.

Sources of cash in a cash budget consist of collection on accounts receivable, capital infusion by owners, interest income etc.

However the largest chunk of cash comes from collections on accounts receivable. When a company sells its goods it does so on cash basis as well as credit basis. Accounts receivable occurs when goods are sold on credit basis. Collections from accounts receivable are the main source of cash inflows for any organization.