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reasons for holding cash

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › reasons for holding cash

  • This topic has 1 reply, 2 voices, and was last updated 3 years ago by John Moffat.
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  • October 8, 2021 at 12:11 pm #637242
    johnbriane
    Member
    • Topics: 170
    • Replies: 160
    • ☆☆☆

    dear sir
    whats the difference between precautionary motive and speculative motive

    ( i did watch the lectures ) but could not grasp the exact diffrence

    October 8, 2021 at 2:13 pm #637252
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54665
    • ☆☆☆☆☆

    Precautionary is carrying more than you expect to need so as to be safer if you find you need more than you expect.

    Speculative if where you carry more than you expect to need to be able to take advantage of special situations (such as materials being available at a cheap price for a period).

    The difference is that with speculative you do not have to spend extra money – it would be your choice. Whereas with precautionary it is where you might have to spend extra money because (for example) costs are higher than you expected.

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