Question 1

Which of the following is not a valid reason for preparing a cash budget?

Accepted Answer

A cash budget focuses on cash flow management, not on determining profit or loss, which is the purpose of an income statement.

Question 2

A cash budget for the six months ended 30 June shows an anticipated overdraft of approximately £4,500. Which of the following would not reduce the expected overdraft?

Accepted Answer

Charging depreciation does not affect cash flow, as it is a non-cash expense. Therefore, changing the depreciation rate will not reduce the expected overdraft.

Question 3

Laura sells goods at a gross profit margin of 40%. Which of the following statements is true?

Accepted Answer

C

Question 4

Lisa sells jumpers at a gross profit margin of 30%. Which one of the following statements is true?

Accepted Answer

The answer of Lisa sells jumpers at a gross profit...

Question 5

Shirley has made the following predictions for her business for the first six months of trading to 30 June:
Sales in Jan, Feb and March = £30,000 per month.
Sales in Apr, May and June = £45,000 per month.
Sales will be on one month's credit,
Purchases will be for cash.
The total cash received from customers during the six months ended 30 June, will be:

Accepted Answer

The answer of Shirley has made the following predictions for...

Question 6

Shirley has made the following predictions for her business for the first six months of trading to 30 June:
Sales in Jan, Feb and March = £30,000 per month.
Sales in Apr, May and June = £45,000 per month.
Sales will be on one month's credit.
The cash received in April will be:

Accepted Answer

Since sales are on one month's credit, the cash received in April will be from March sales, which is £30,000.

Question 7

Shirley has made the following predictions for her business for the first six months of trading to 30 June:
Sales in Jan, Feb and March = £30,000 per month.
Sales in Apr, May and June = £45,000 per month.
Sales will be on one month's credit.
Purchases will be for cash.
If goods are sold at a gross profit margin of 33.33%, and goods are replaced as soon as they are sold, the amount payable to suppliers in March, will be:

Accepted Answer

The answer of Shirley has made the following predictions for...

Question 8

An extract from Bridget's Cash Budget is given below:
 What is the expected bank overdraft at the end of June?

Accepted Answer

The answer of An extract from Bridget's Cash Budget is...

Question 9

An extract from Hazel's Cash Budget is given below:
 Which of the following overdraft facilities would you advise Hazel to request for the three months ended 30 November?

Accepted Answer

The answer of An extract from Hazel's Cash Budget is...

Question 10

During July, Alison's first month of trading, she purchased 5,000 plates at £5 each and sold 4,000 plates at £7 each.
If half of Alison's sales were for cash and half were on one month's credit, Alison's Cash Budget for July would show the following:

Accepted Answer

Alison sold 4,000 plates at £7 each, totaling £28,000 in sales. Since half of the sales were for cash, the cash receipts for July would be £14,000.

Quiz 1: The Cash Budget

Which of the following is not a valid reason for preparing a cash budget?

A cash budget for the six months ended 30 June shows an anticipated overdraft of approximately £4,500. Which of the following would not reduce the expected overdraft?

Laura sells goods at a gross profit margin of 40%. Which of the following statements is true?

Lisa sells jumpers at a gross profit margin of 30%. Which one of the following statements is true?

Shirley has made the following predictions for her business for the first six months of trading to 30 June: Sales in Jan, Feb and March = £30,000 per month. Sales in Apr, May and June = £45,000 per month. Sales will be on one month's credit. The cash received in April will be:

An extract from Bridget's Cash Budget is given below: What is the expected bank overdraft at the end of June?

An extract from Hazel's Cash Budget is given below: Which of the following overdraft facilities would you advise Hazel to request for the three months ended 30 November?

During July, Alison's first month of trading, she purchased 5,000 plates at £5 each and sold 4,000 plates at £7 each. If half of Alison's sales were for cash and half were on one month's credit, Alison's Cash Budget for July would show the following: