ACCA MA · Chapter 10 · Question 5 of 11
Sales are made on credit and cash is received as follows: 20% in the month of sale (customers take a 2% discount), 50% in the following month, 28% in the second month after sale, and 2% become irrecoverable debts. Sales were January $50,000, February $60,000 and March $70,000. What are the budgeted cash receipts for March?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) $57,720
Explanation
March sales: 70,000 x 20% x 98% = $13,720. February sales: 60,000 x 50% = $30,000. January sales: 50,000 x 28% = $14,000. Total = 13,720 + 30,000 + 14,000 = $57,720. Ignoring the discount gives $58,000.
More Budgeting MCQs
- Q7What is a flexible budget?
- Q8Which of the following is a disadvantage of participative (bottom-up) budgeting?
- Q9Which of the following is NOT a purpose of budgeting?
- Q10Which document sets out the instructions, procedures, timetable and responsibilities for preparing the budget?
- Q11Senior management prepares the budget and passes it down to operational managers, who are given little or no opportunity to take part in…