If a monthly cash flow forecast shows cash receipts of $28,000 and cash disbursements of $33,000 with a beginning cash balance of $5,000, what is the ending cash balance?

If a monthly cash flow forecast shows cash receipts of $28,000 and cash disbursements of $33,000 with a beginning cash balance of $5,000, what is the ending cash balance?

• A. 5,000
• B. 3,000
• C. 0
• D. -2,000

Answer: (C)

Ending cash balance is found by taking the beginning cash, adding cash receipts, and subtracting cash disbursements. Start with 5,000, add receipts of 28,000 to get 33,000 available, then subtract disbursements of 33,000 to arrive at 0. So the ending cash balance is zero. This shows the forecast uses all available cash with no surplus or deficit. If receipts were smaller than disbursements plus the beginning balance, the ending balance would be negative, indicating a financing need.

Ending cash balance is found by taking the beginning cash, adding cash receipts, and subtracting cash disbursements. Start with 5,000, add receipts of 28,000 to get 33,000 available, then subtract disbursements of 33,000 to arrive at 0. So the ending cash balance is zero. This shows the forecast uses all available cash with no surplus or deficit. If receipts were smaller than disbursements plus the beginning balance, the ending balance would be negative, indicating a financing need.