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July 16, 2020 at 10:12 pm
close the business down its not profitable, how a business can increase sales by 100% but at the same time increase its purchases by 300% is mad.
This company should have done the draft P&L then shut shop and not wasted the accounts departments time asking them to do a cash flow at all.
July 23, 2020 at 11:16 pm
Interesting observation 🙂
August 18, 2019 at 9:43 pm
The opening cash balance $15.000 shouldn’t been for NovX1?
John Moffat says
August 19, 2019 at 7:25 am
I must change the wording of the question to make it clear that it is the balance at the beginning of January (otherwise it would not be possible to do the question because there would not be enough information 🙂 )
August 19, 2019 at 9:28 pm
Thank you very much
August 20, 2019 at 6:04 am
You are welcome 🙂
February 24, 2020 at 1:31 pm
That’s great you’ve mentioned this. I went crazy when during the lecture, I’ve said it’s an opening balance for Jan. Generally speaking, I hate assumptions like this or 360/365 days a year etc.
Anyway, you are the hero John. This page is a gigantic effort.
all the best, Maciej
February 24, 2020 at 2:24 pm
Thank you for your comment 🙂
Samuel Koroma says
July 8, 2019 at 12:48 pm
The business should consider ways of managing cash surplus/deficit when they arise using a variety of options for example if a deficit occur the business might decide to seek an overdraft of curtail cost like capital expenditure and defer dividends. Likewise if there is a surplus the business can invest it, repay loans etc
January 24, 2019 at 1:55 am
Do we have to know the cash budget proforma?Is it possible to get a question like example 1?
January 24, 2019 at 10:21 am
The exact layout is not so important, although the layout I do for the example is the best. And yes, you could be asked to prepare a cash budget like example 1.
January 25, 2019 at 2:27 am
Thank you sir
January 25, 2019 at 10:28 am
Sebaga Gourlay says
November 8, 2018 at 12:55 pm
Hello, thank you very much for your full explanation. There is one thing which I don’t understand in your workings:
75% of wages being paid in the current month and 25% in the following month:-
Why are you using January for 75% wages as the current month and 25% wages December for the following month?
Is the current month not Nov if the following month is Dec?
March 28, 2019 at 4:32 pm
I am also confused about that
March 29, 2019 at 6:33 am
The first month required for the cash budget is January.
75% of January’s wages are actually paid in January.
For December’s wages, 75% will have been paid in December (but that is not relevant for our cash budget given we are first doing it for January), but the other 25% of December’s wages are paid in the month following, which is January (and this is relevant).
(For Novembers wages, 75% will have been paid in November and 25% in December, but again the question asks for the cash budget from January onwards and so neither of the payments for Novembers wages are relevant for January. I assume that you have downloaded the lecture notes and so do have the question in front of you?)
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