Use the information below to answer the following questions.
Jackson Bottle Yard, a recycling glass company, has supplied the following information in relation to their actual sales in 2015 and planned sales for the first quarter of 2016. Past records indicate that expected receipts collected from debtors will be: 60 per cent in the month of sale
40 per cent in the month following the sale
-What action might be considered if the cash budget reveals a deficit?
A) purchasing more capital equipment
B) increasing the overdraft limit
C) reducing the period of credit to debtors
D) B and C

Question

Use the information below to answer the following questions.
Jackson Bottle Yard, a recycling glass company, has supplied the following information in relation to their actual sales in 2015 and planned sales for the first quarter of 2016.  Past records indicate that expected receipts collected from debtors will be: 60 per cent in the month of sale
40 per cent in the month following the sale
-What action might be considered if the cash budget reveals a deficit?
A) purchasing more capital equipment 
B) increasing the overdraft limit 
C) reducing the period of credit to debtors 
D) B and C

Quizplus · Accepted Answer

Increasing the overdraft limit (B) provides immediate additional cash to cover the deficit. Reducing the period of credit to debtors (C) accelerates cash inflows by encouraging faster payment from customers. Both actions help manage a cash budget deficit.

Use the Information Below to Answer the Following Questions