Clare is drawing up her budgets for the financial year to 31 December 2021. In January 2021, she is expecting her trade receivables to pay her the £85,000 that they are budgeted to owe at 31 December 2020. To which budgets will Clare allocate the budgeted £85,000 receipt of cash from her trade receivables?

Question

Quizplus · Accepted Answer

The £85,000 receipt from trade receivables will affect the cash budget as it is a cash inflow and the budgeted statement of financial position as it reduces trade receivables. It does not affect the budgeted statement of profit or loss as it is not a revenue or expense item.

Clare Is Drawing Up Her Budgets for the Financial Year