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Hi sir can u pls explain since the loan receipts occur at the beginning of march, why dont we show that at the end of feb.. what i understand is that this is only done in investment appraisal computation? For cash forecasts the timing doesnt matter it is always to be included in the month it is occuring?
Please tell me where to find the question Flit !!
Is it a past exam question or is it a question in the BPP Revision Kit?
The question wants to know the cash balance at the end of each month. Given that the loan was received in March, it does not affect the cash balance at the end of February – it only affects the balance at the end of March.
When in March the money is received is of no relevance.
If we were doing an NPV calculation then certainly it would make a difference as to whether it was received at the beginning or end of the month, but we are not discounting here (and would not be required to anyway because it would mean discounting monthly).
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