Interview
Cash Budget Analysis
- Course
- Institution
- Book
Simple summary of module 15 cash budget analysis and interpretations
[Show more]
Connected book
Book Title:
Author(s):
- Edition:
- ISBN:
- Edition:
More summaries for
-
Matric Accounting Updated Notes
-
Grade 12 IEB Accounting (Paper 1 & Paper 2)
-
Manufacturing/ Cost Accounting
Seller
Follow
ohsnapitssaian
Content preview
Analysis and interpretation of Cash budgetsWhy do we analyse and interpretate cash budgets and statements of comprehensive
income?
o To monitor the actual performance against the projected in order to detect
problems early and apply corrective actions
LOAN
How do you know if it’s a good idea to budget for a loan?
Yes No
- Does not put the business in - Business goes into overdraft
overdraft (business has capital) - Generally, the interest on
- Avoids further additional interest overdraft is higher than that of a
as the loan will decrease and loan
therefore the business’s risk will
decrease An overdraft is a short-term loan
- Paying quicker means that the therefore, has a higher interest rate.
bus/comp is abiding by the loan
agreement
Would we be happy with the budgeted results if loan payment was not made?
Yes
- An advantage is that if the loan - Not repaying the loan would
had not been paid the business mean additional interest and
would have a favorable balance possible penalties if the payment
- Show calculations was stipulated in the loan
Eg. Closing bank balance + loan agreement
=X - Bank can repossess assets
X +- surplus/ deficit
=Y
Y +- deficit
= If favorable then it is a good idea to
not pay loan as it avoids a short-term Must look at both the advantages
loan (overdraft) which has a higher and disadvantages that comes with a
interest rate loan repayment
Calculating the loan
1. Int on loan x 12 = Ry (annual interest)
2. Ry ÷ 0, int rate = Loan
Calculating interest on loan if there was a repayment
1. Loan – Repayment = X
2. (X x interest rate) ÷ 12 = interest on loan
What can they do instead of taking out a loan to avoid interest?
o Hire/ rent equipment if they are taking out a loan to pay for equip
o Sell obsolete assets
, SALES
Comment on turnover
Reasons for an increase in turnover? Reasons for a decrease in turnover?
1. Too many sales occurring
2. Too many trade discounts are given
3. Customers are not supporting the
business (ethical reasons?)
4. It is a possibility that a holiday season
just passed. People don’t want to
spend their money
5. Decreasing advertising
Turnover is increasing by Rx on a Turnover is decreasing by Rx (amount) on a
monthly basis monthly basis
- Shows positive growth in the
customer base
What percentage of turnover is being spent on advertising and selling expenses?
Advertsing +Selling
×100
sales
Is their policy successful?
Yes, if sales are increasing on a No if sales are decreasing on a continuous
continuous basis basis (each month)
Working out sales from credit purchases
1. Get the credit sales to 100 if there was a discount
2. Work out COS with the credit percentage
3. Use COS to get Sales
MARK UP
Is the business expected to maintain a fixed mark-up % over the forecast period?
January:
Sales
COS
GP
- Work out mark-up %
GP
Mark up= × 100
cos
February:
Sales
COS
GP
- Work out mark-up %
If mark up across the months are equal therefore there is a fixed mark-up
If not, the business is not maintaining a fixed mark up
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller ohsnapitssaian. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $2.75. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
49497 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now