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Specimen Question paper September 2016

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Specimen Question paper September 2016

  • This topic has 3 replies, 2 voices, and was last updated 9 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • May 18, 2016 at 10:27 am #315593
    lisaiita
    Participant
    • Topics: 6
    • Replies: 17
    • ☆

    I have a question regarding the MCQs Specimen for September 2016 on ACCA website, question 8 in case you didnt check it out yet. It reads as follow ” The management of XYZ Co has annual credit sales of $20M and accounts receivables of $4 million. Working capital is financed by an overdraft at 12% interest per year.” What is the annual finance cost saving if the management reduces the collection period to 60 days?

    A) $85 479

    B) $ 394 521

    C) $ 78 904

    D) $ 68 384

    My answer was $20 m *60/365 *0.12= $394 521, which is B

    BUT EXAMINERS ANSWER WAS

    $20M *13/365*0.12 = $85 479

    How did s/he got 13?

    May 18, 2016 at 2:49 pm #315635
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54659
    • ☆☆☆☆☆

    Receivables are currently taking 4M/20M x 365 = 73 days.

    In future they will take 60 days.

    So the saving they make is due to collecting receivables 13 days faster!

    May 18, 2016 at 7:05 pm #315689
    lisaiita
    Participant
    • Topics: 6
    • Replies: 17
    • ☆

    I did not think of this before. Thank you John…..

    May 19, 2016 at 7:47 am #315736
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54659
    • ☆☆☆☆☆

    You are welcome 🙂

  • Author
    Posts
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