Question:
Task 1
For each transaction, decide whether it should be included in the cash budget for the business; prepare a cash budget for the three months ending 31 March, 2022.
- Anton invested £10,000 cash in the business on 1 January, 2022.
- Anton plans to make drawings of £800 per month for each personal expenditure.
- Anton purchases a computer for his personal use at a cost of £499 in January.
- Anton also purchased a computer in January for business purposes at a cost of £720 cash.
- He plans to buy a motor vehicle for £3,200 cash on 1 March, for business purposes.
- Sales estimates are as following:
January = £4,200
February = £ 3,200
March = £2,950
- Sales are made 30% cash and 70% on one months’ credit.
- Purchases will be made for cash as follows:
January = £ 2,800
February = £1,500
March = £1750
- Other expenses are estimated as follows:
- Electricity £285 payable at the end of the quarter.
- Telephone costs of £120 per month, payable at the end of each month by cash.
- Fuel cost for motor vehicle estimated to be £65 per month, payable in the same month.
Task 2
What is Accounting Equation and explain why the accounting equation will always work? Also, provide an example with your explanation.
What benefits might a company gain from having its shares listed on a stock exchange?
Who do you think might be considered to be stakeholders in a large listed company like Marks and Spenser?
Is the profit that a business makes a reliable indicator of its cash balances? What are the differences between Profit and Cash?
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