Future Business Leaders of America (FBLA) Agribusiness Practice Test

What term refers to the receipts and disbursements within a business that determine the cash flow budget?

1. Cash reserves

2. Cash flow

3. Expense reports

4. Income statements

The correct answer is: Cash flow

The term that refers to the receipts and disbursements within a business that determine the cash flow budget is cash flow. Cash flow encompasses all the inflow and outflow of liquid assets within a business over a certain period of time. It provides crucial insights into the financial health of a business by indicating how much cash is available for operations, investments, and other expenditures. Having a solid understanding of cash flow is vital for effective financial management. It helps businesses predict their liquidity needs and assists in budgeting and planning for future expenses. Cash flow can highlight trends in revenue and spending, allowing businesses to make informed decisions regarding investments and strategies for growth. While cash reserves refer to the amount of cash a business has on hand, and expense reports detail specific expenditures, they do not fully cover the overall cash movements. Income statements summarize revenues and expenses over a specific period but do not specifically track cash flow activities. Therefore, cash flow is the most accurate term that encapsulates the dynamics of receipts and disbursements critical in determining a cash flow budget.