To forecast cash inflows and outflows, anticipate surpluses/shortfalls, and plan funding.

• A. To assess year-end tax liability.
• B. To track donations received during the year.
• C. To evaluate investment returns.
• D. To forecast cash inflows and outflows, anticipate surpluses/shortfalls, and plan funding.

Answer: (D)

Cash flow forecasting is about estimating when money will come in and go out so you can see potential surpluses or shortfalls and arrange funding accordingly. This directly describes forecasting cash inflows and outflows, anticipating surpluses/shortfalls, and planning funding, which is the essential activity for managing liquidity and ensuring the organization can meet its obligations. The other options focus on narrower or different objectives: taxes at year end, tracking donations as income, or evaluating investment performance. These do not capture the proactive planning of liquidity and funding that forecasting cash flows provides.