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cash budget

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › cash budget

  • This topic has 3 replies, 2 voices, and was last updated 7 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • December 4, 2015 at 2:31 pm #287547
    ellean
    Member
    • Topics: 7
    • Replies: 18
    • ☆

    Hi John,

    two simple questions abount cash budget:
    1. it is likely to be asked in the exam?
    2. Don’t understand two points in this exercise:

    a. 40% of sales is calculated also in the current month (the text says cash will be received from previous month and I sould assume at the end of may we will issue receipts for june, which will give cash referedd to may)

    b. formula component used in the solution: (70% x 60% x $70,000 x 98%). I understand the 98% is due to the discount, 70% is due to the cash as percentage of sales, but don’t get the 60%. The texts says cash are 40% of sales.

    EXERCISE TEST

    BDL plc is currently preparing its cash budget for the year to 31 March 20X8. An extract from its sales budget for the same year shows the following sales values.
    $
    March 60,000
    April 70,000
    May 55,000
    June 65,000

    40% of its sales are expected to be for cash. Of its credit sales, 70% are expected to pay in the month after sale and take a 2% discount; 27% are expected to pay in the second month after the sale, and the
    remaining 3% are expected to be bad debts.

    SOLUTION

    40% of May sales for cash (40% x $55,000) 22,000
    70% of April credit sales less 2% discount (70% x 60% x $70,000 x 98%) 28,812
    27% of March credit sales (27% x 60% x $60,000) 9,720
    60,532

    thanks a lot.

    December 4, 2015 at 3:32 pm #287576
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51551
    • ☆☆☆☆☆

    I have just answered this question from you – you must have posted it twice.

    It could certainly be asked in the exam, but every person gets a different exam – the questions are drawn at random. I would be surprised if you got more than 1 question on cash budgets.

    December 7, 2015 at 2:04 pm #288493
    ellean
    Member
    • Topics: 7
    • Replies: 18
    • ☆

    Thank you, I did post there to try some help from other students, but got your!
    Hope so! just wondering how much time to invest there!

    December 7, 2015 at 4:37 pm #288578
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51551
    • ☆☆☆☆☆

    The problem with Section A of the exam is that all topics are likely to be asked, although most of them are unlikely to be more that 1 or 2 questions.
    Usually variances is the topic on which there are most questions.
    Also expect many of the questions to be testing understanding by choosing things like “which is the correct statement” – the questions in section A will not all involve calculations.

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