The forecasting process assumes that the cash on the balance sheet is a plug.
True/False
The Statement is True.
Reason:
The Forecasting models estimates the balances of all assets (other than cash), all the liabilities and all the equity accounts. Cash balance is not an estimate, it is an actual amount. The final step is to Ascertain the amount of cash needed to balance the balance sheet (which is known as the plug).
The Plug is computed as Total Assets(total liabilities + Equity) - All other asset balances.
So, The correct answer is True.
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