15-Some expenses that appear in the income statement do not require a direct cas

Question

15-Some expenses that appear in the income statement do not require a direct cash payment during the period. List at least 2 such expenses. 16-Explain the purposes of the following budgets: (a) debt service budget (b) current payable budget (c) estimated cash receipts from customers and (d) prepayment budget 17-Explain why it is necessary to distinguish between cash budget estimates and operating budget estimates 18-When evaluating the performance of a manager, why should fixed costs be divded into the categories of controllable costs and committed costs 19-What is a rolling budget? Why do some companies choose to use rolling budgets? 20-Frequently the disadvantages of budgeting are not discussed in textbooks.What are some disadvantages to budgeting?

Explanation / Answer

debt service budget The cash that is required for a particular time period to cover the repayment of interest and principal on a debt. Debt service is often calculated on a yearly basis. Debt service for an individual often includes such financial obligations as a mortgage and student loans. Companies may have outstanding loans or outstanding interest on bonds or the principal of maturing bonds that count towards the company's debt service. An individual or company that is not able to make payments to service the debt can be said to be "unable to service (his/her/its) debt."

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