Question

Under the Cash Budget method of assessment, how does a generated cash deficit or cash surplus directly affect a borrower's active Cash Credit (C

Q: Answer-Under the Cash Budget method of assessment, how does a generated cash deficit or cash surplus direct...

Step 5 of the Cash Budget section details that if an enterprise maintains an active revolving loan facility like a Cash Credit or Overdraft account, an operational cash surplus generated during a month directly reduces the outstanding loan balance at the end of that month. Conversely, an operational cash deficit increases the outstanding utilization balance in the loan account.