Western Governors University (WGU) BUS2040 D076 Finance Skills for Managers Practice Exam

The term that describes a plan for controlling cash inflows and outflows to balance income with expenditures is cash budgets. A cash budget is a detailed plan that anticipates the cash received and cash spent over a specific period. It is an essential financial tool that helps organizations ensure they have sufficient liquidity to meet their obligations while also planning for future financial needs.

Cash budgets are critical for managing cash flow effectively, enabling managers to foresee potential shortfalls and allocate resources accordingly. This proactive approach aids in avoiding cash shortages, and it can guide decisions related to inflows from revenue generation and outflows for operational costs. By closely tracking and planning for cash movements, businesses can maintain financial stability and avoid disruptions due to liquidity issues.

In contrast, a cash flow statement provides a historical record of cash movement but does not serve as a plan; cash management refers broadly to strategies employed to manage cash resources; and an operating budget outlines projected revenue and expenses but may not focus specifically on the timing of cash inflows and outflows.