MOD003319: Prepare a Cash Budget for the Three Months Ending 31 March 2022 and Anton invested £10,000 cash in the business on 1 January 2022: Business Finance Assignment, ARU, UK

University Anglia Ruskin University(ARU)
Subject MOD003319: Business Finance

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.

1. Anton invested £10,000 cash in the business on 1 January 2022.

2. Anton plans to make drawings of £800 per month for each personal expenditure.

3. Anton purchases a computer for his personal use at a cost of £499 in January.

4. Anton also purchased a computer in January for business purposes at a cost of £720 cash.

5. He plans to buy a motor vehicle for £3,200 cash on 1 March, for business purposes.

6. Sales estimates are as following:
January = £4,200
February = £ 3,200
March = £2,950
7. Sales are made 30% cash and 70% on one months’ credit.

8. Purchases will be made for cash as follows:
January = £ 2,800
February = £1,500
March = £1750

9. 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

2.1 What is Accounting Equation and explain why the accounting equation will always work? Also, provide an example with your explanation.

2.2 What benefits might a company gain from having its shares listed on a stock exchange?

2.3 Who do you think might be considered to be stakeholders in a large listed company like Marks and Spenser?

2.4 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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