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Hi,
A question that I am attempting from the Kaplan exam kit asks for me to work out cash receipts from sales in a particular month And has stated 20% sales will be for cash. Then proceeds to say of credit customers, 25% will pay one month later,50% the month after that and 25% after another month.
The answer I would have thought would be only the CASH sales, as it asks for the cash receipts. But the answer actually gives both credit and cash combined for that month….. If you follow what I’m saying? I just want to know if my understanding of the question is wrong. From what I got of the question (far too long and difficult to type out) it wants the cash receipts which means only the cash portion. Or is that what would be said for receivables in general?
Thank you
If you sell on credit, then you still receive cash – it is just that you receive the cash in later months rather than in the current month.
I do suggest that you watch my free lectures on cash budgets.
The lectures are a complete free course for Paper FM and cover everything needed to be able to pass the exam well.
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