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Cash Budgeting

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Cash Budgeting

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by John Moffat.
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  • April 6, 2021 at 10:51 am #616074
    ricky56
    Participant
    • Topics: 1
    • Replies: 0
    • ☆

    hell sir,

    please can you explain to me how a business manages surpluses and deficits predicted in cash
    budgets.

    thank you.

    April 6, 2021 at 2:14 pm #616095
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51551
    • ☆☆☆☆☆

    Given the nature of the exam, this is unlikely to be asked in Paper MA, and is much more likely in Paper FM (and is of course therefore discussed in the Paper FM lectures).

    If tt is a short-term surplus then they will look for short-term investments such as a deposit account.
    If it is a long-term surplus then they they consider investment in more assets or consider paying a higher dividend to the shareholders.

    If it is a short-term deficit then they will look to see if they can get debtors to pay sooner, or will make arrangements for an overdraft from the bank, or defer buying new assets or paying a dividend.
    If it is a long-term deficit then they will see if they can cut costs or arrange raising long-term finance.

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