Cash Management

True or False. A business that makes good profits will always have enough cash to meet its commitments?

Which of the following items do not appear as a payment in a cash budget?

• payments of wages

• payments to suppliers (Accounts Payable)

• cash purchase of equipment

• depreciation on equipment

During May, credit sales totalled $240 000. The business usually receives 80% of its debts in the first month after sale. How much cash is received in June from the credit sales in May?

• $192,000

• $48,000

• $240,000

• $190,000

Which item is not included in the GST Collected section of the Statement of GST Payable to the ATO?

• rent revenue

• interest received from investments

• cash sales

• accounts receivable

True or False. The cash budget is an attempt to predict future events for the business?

• True

• False

• Both

• None of the above

Show the formula to calculate GST Credits received , if Cash Purchases for the month of May were $90,000?

Use the following information to calculate the Closing Cash position of the business. Opening cash balance $20,000Cr; estimated cash payments $90,000; estimated cash receipts $180,000.

• $110,000

• $70,000

• $200,000

• None of the above

When cash receipts exceed cash payments on the cash budget, the resultant cash position is referred to as a

• shortage

• profit

• surplus

• deficit

Which of the following items are included in the GST Credits Received section of the Statement of GST Payable to the ATO? 'Tick all relevant options'

• purchase of assets

• cash purchases

• payment of wages

• payment of drawings to owner

Strategies to improve the cash receipts within the budget period could include?

• increase sales price on inventories sold

• tighten collection rates for payments received from accounts receivable

• source supplies from cheaper suppliers so you are spending less

• all of the above