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IA – JULY 2020 – L1 – Q6 – Cash Budget Uses and Preparation

Mention three uses of a cash budget and prepare a six-month cash forecast from given estimates.

Question

Mention any three (3) uses of a Cash Budget.
THE CATHEDRAL commences business on January 1, 2020 and introduces GHS 1,000,000 cash as capital. He also borrows GHS 400,000 from his brother at 10% per annum interest, payable half-yearly in June and December. He makes the following estimates about the first six months of 2020:

Fixed Assets	GHS 1,000,000 purchases for cash in January 2020.
Sales	GHS 600,000 per month, two month’s credit to be given to customers.
Purchases	GHS 800,000 in January and GHS 400,000 per month thereafter, suppliers will allow one month’s credit.
Expenses	GHS 40,000 per month average, excluding interest payable in the month in which they are incurred.
Drawings	GHS 10,000 per month.

You are required to prepare a Cash Forecast for the business of THE CATHEDRAL for the first six months of 2020 which shows the Cash Balance at the end of each month.

Answer

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Tags: Cash Budget Uses, Cash Forecast Preparation, Receipts Payments
Level: Level 1

Topic: Cash forecast
Series: JULY 2020

CIB GH – INTRODUCTION TO ACCOUNTING – APRIL 2024 – L1 – Q4 – Characteristics of Useful Accounting Information and Cash Budget

Explain five characteristics of useful accounting information; identify three ways to address negative cash balances in a cash budget.

Question

a) Explain each of the following characteristics of useful Accounting Information:

i) Relevance (3 marks)

ii) Understandability (3 marks)

iii) Materiality (3 marks) iv) Completeness (3 marks)

v) Neutrality (3 marks)

b) A Cash Budget is an estimation of the cash flows of a business over a specific period of time. This Budget is used to assess whether an entity has sufficient cash to continue operating over a given time frame. The Cash Budget provides a company with insight into its cash needs (and any surplus) and helps to determine an efficient allocation of cash. You are required to: Identify THREE (3) ways a business can address negative net monthly cash balances in a Cash Budget. (5 marks)

[Total: 20 marks]

Answer

Find Related Questions by Tags, levels, etc.

Tags: Cash Budget, Completeness, Materiality, Negative Cash Balances, Neutrality, Relevance, Understandability
Level: Level 1

Topic: Cash forecast
Series: APR 2024

IA – JULY 2020 – L1 – Q6 – Cash Budget Uses and Preparation

Mention three uses of a cash budget and prepare a six-month cash forecast from given estimates.

Question

Mention any three (3) uses of a Cash Budget.
THE CATHEDRAL commences business on January 1, 2020 and introduces GHS 1,000,000 cash as capital. He also borrows GHS 400,000 from his brother at 10% per annum interest, payable half-yearly in June and December. He makes the following estimates about the first six months of 2020:

Fixed Assets	GHS 1,000,000 purchases for cash in January 2020.
Sales	GHS 600,000 per month, two month’s credit to be given to customers.
Purchases	GHS 800,000 in January and GHS 400,000 per month thereafter, suppliers will allow one month’s credit.
Expenses	GHS 40,000 per month average, excluding interest payable in the month in which they are incurred.
Drawings	GHS 10,000 per month.

You are required to prepare a Cash Forecast for the business of THE CATHEDRAL for the first six months of 2020 which shows the Cash Balance at the end of each month.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Cash Budget Uses, Cash Forecast Preparation, Receipts Payments
Level: Level 1

Topic: Cash forecast
Series: JULY 2020

CIB GH – INTRODUCTION TO ACCOUNTING – APRIL 2024 – L1 – Q4 – Characteristics of Useful Accounting Information and Cash Budget

Explain five characteristics of useful accounting information; identify three ways to address negative cash balances in a cash budget.

Question

a) Explain each of the following characteristics of useful Accounting Information:

i) Relevance (3 marks)

ii) Understandability (3 marks)

iii) Materiality (3 marks) iv) Completeness (3 marks)

v) Neutrality (3 marks)

[Total: 20 marks]

Answer

Find Related Questions by Tags, levels, etc.

Tags: Cash Budget, Completeness, Materiality, Negative Cash Balances, Neutrality, Relevance, Understandability
Level: Level 1

Topic: Cash forecast
Series: APR 2024

Topic: Cash forecast

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IA – JULY 2020 – L1 – Q6 – Cash Budget Uses and Preparation

Mention three uses of a cash budget and prepare a six-month cash forecast from given estimates.

CIB GH – INTRODUCTION TO ACCOUNTING – APRIL 2024 – L1 – Q4 – Characteristics of Useful Accounting Information and Cash Budget

Explain five characteristics of useful accounting information; identify three ways to address negative cash balances in a cash budget.

IA – JULY 2020 – L1 – Q6 – Cash Budget Uses and Preparation

Mention three uses of a cash budget and prepare a six-month cash forecast from given estimates.

CIB GH – INTRODUCTION TO ACCOUNTING – APRIL 2024 – L1 – Q4 – Characteristics of Useful Accounting Information and Cash Budget

Explain five characteristics of useful accounting information; identify three ways to address negative cash balances in a cash budget.

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IA – JULY 2020 – L1 – Q6 – Cash Budget Uses and Preparation

Mention three uses of a cash budget and prepare a six-month cash forecast from given estimates.

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CIB GH – INTRODUCTION TO ACCOUNTING – APRIL 2024 – L1 – Q4 – Characteristics of Useful Accounting Information and Cash Budget

Explain five characteristics of useful accounting information; identify three ways to address negative cash balances in a cash budget.

You're reporting an error for "CIB GH – INTRODUCTION TO ACCOUNTING – APRIL 2024 – L1 – Q4 – Characteristics of Useful Accounting Information and Cash Budget"

IA – JULY 2020 – L1 – Q6 – Cash Budget Uses and Preparation

Mention three uses of a cash budget and prepare a six-month cash forecast from given estimates.

You're reporting an error for "IA – JULY 2020 – L1 – Q6 – Cash Budget Uses and Preparation"

CIB GH – INTRODUCTION TO ACCOUNTING – APRIL 2024 – L1 – Q4 – Characteristics of Useful Accounting Information and Cash Budget

Explain five characteristics of useful accounting information; identify three ways to address negative cash balances in a cash budget.

You're reporting an error for "CIB GH – INTRODUCTION TO ACCOUNTING – APRIL 2024 – L1 – Q4 – Characteristics of Useful Accounting Information and Cash Budget"

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