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An important reason for imposing a minimum cash balance in the cash budget is:

a. it provides a cushion that absorbs forecast errors
b. it provides extra funds for managers to spend
c. it makes the balance sheet look better
d. all of the above

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Solution Summary

An important reason for imposing a minimum cash balance in the cash budget is:

a. it provides a cushion that absorbs forecast errors
b. it provides extra funds for managers to spend
c. it makes the balance sheet look better
d. all of the above

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a. it provides a cushion that absorbs forecast errors

Forecast errors ...

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