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BPP Q33 Louieed (March/June 16)

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › BPP Q33 Louieed (March/June 16)

  • This topic has 1 reply, 2 voices, and was last updated 7 years ago by AvatarJohn Moffat.
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  • November 11, 2018 at 8:13 pm #484528
    Avatardavidlemonhhl
    Member
    • Topics: 7
    • Replies: 12
    • ☆

    Hello sir,

    In the last few lines of the case the question said ‘…that the return on cash surpluses is 5% pre-tax’.

    What does it mean by ‘return on cash surpluses’?

    Thanks.

    November 11, 2018 at 8:40 pm #484533
    AvatarJohn Moffat
    Keymaster
    • Topics: 57
    • Replies: 54839
    • ☆☆☆☆☆

    It means that they are earning interest of 5% on any cash balances (and if they use the cash then they will be losing interest of 5%).

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