QUESTION 5

Creditors accounts are settled 35% in the month of purchase and 65% in the month following the purchase. If credit purchases are $20,000 in January and $26,000 in February how much cash is paid to creditors in February?

1. $20,000
2. $46,000
3. $23,900
4. $26,000
5. $22,100

QUESTION 7

Which of these isnota strategy to improve cash inflow?

1. Offer incentives to debtors for prompt payments
2. Sell off unnecessary non-current assets
3. Increase expenditure on non-current assets
4. Increase sales
5. All are strategies to improve cash inflow

QUESTION 16

If the opening balance of cash for one month is $20,000, cash receipts are estimated to be $389,000 and cash payments are estimated as $300,000 the opening cash balance at the beginning of the next month is:

1. $69,000
2. $109,000
3. $89,000
4. cannot be calculated

QUESTION 19

In business it is desirable to build up cash balances as high as possible to cope with any emergency.

1. True
2. False