Unit 4 outcome 2.1

Question 1

Spreadsheet benefit

Answer 1

Using formulae in a spreadsheet means these figures can be recalculated automatically when changes are made to the expected

Provide the owner with information that takes into account alternative situation and course of actions so that better decision can be made

Question 2

Cash vs Profit

Answer 2

Cash is those transactions that you received the money as the transaction occurs. Whereas profit is what remains after expense has been deducted from revenue.

Question 3

Cash inflows that are not revenue

Answer 3

GST received
GST refund
Capital contribution
Receipt of Loan
Cash sale of a non current asset

Question 4

Cash outflows that are not expense

Answer 4

GST paid
GST settlement
Cash payment for a non current asset
Cash drawing

Question 5

actions the owner could take to address a budgeted cash decrease.

Answer 5

Action 1: Take action to increase receipts from Accounts Receivable eg., prompt invoicing/reminder calls, threats of legal action, refuse supply.
Action 2: Pay Accounts Payable more slowly but within credit days. NOT: organise overdraft/capital contribution/loan repayment/offer discounts

Question 6

Budgeted Cash Flow Statement

Answer 6

an Accounting report that attempts to predict all future cash inflows and cash outflows, and thus the estimated bank balance at the end of the budget period.

Question 7

Budgeted Income Statement

Answer 7

an Accounting report that shows expected future revenues and expenses and, as a result, the expected profit for the budget period.

Question 8

Schedule of Receipts from Accounts Receivable

Answer 8

a table used to calculate how much cash will be received from Accounts Receivable in the budget period as a consequence of Credit sales in the current and previous periods.

Question 9

Variance purpose:

Answer 9

The preparation of variance reports allows budgeted amounts to be compared to actual amounts at the end of a budget period and can be used to identify problem areas. Decisions can then be made and corrective action taken to improve future performance.

Question 10

Liquidity:

Answer 10

The ability for the business to meet its short term debts as they fall due

Question 11

Ethical decision making of Budgeted

Answer 11

aids decision making because it sets a standard for the assessment of the firm’s actual performances. By comparing budget with actual, the owner can identify problems areas and then act to correct the stiatution.