Basic Accounting and Banking: Cash Flow Forecast, PFI Financing, and Liabilities of Equity Partners

This article covers cash flow forecasting, financing through PFI, and liabilities of equity partners in Basic Accounting and Banking. The cash flow forecast shows that the business is viable in terms of having sufficient liquidity towards meeting their external obligations and commitments towards suppliers of funds and goods. PFI is a good source of financing for new surgery, and the liabilities of equity partners include making payments towards outstanding obligations and debts of the partnership business. Get more study material, solved assignments, essays, and dissertations at Desklib.

BASIC ACCOUNTING AND
BANKING

Table of Contents
Cash Flow Forecast......................................................................................................................3
Financing through PFI (Private Finance Initiative).....................................................................4
Explanation of liabilities of equity partners with reference to practising accounts and tax........5
REFERENCES................................................................................................................................6

Cash Flow Forecast
Amount in £
Particulars April May June
Receipts:
Global Sum
Payments
50000 60000 62000
Enhanced Service
Income
15500 16800 19900
Private Income 5500 6000 7000
Drug Reimbursement
Income
3000 4000 9000
Total Receipts 74000 86800 97900
Payments:
Staff salaries 15000 15000 15000
HMRC payments 7500 8200 9200
Petty Cash 500 700 850
Lease Payments 500 500 500
Sundries 250 250 250
Locums 2500 2700 3500
Credit purchases 21000 24000 28000
Rent & Rates 700 700 700
Insurances 200 200 200
HL&P 600 750 700
Maintenance 1000 1100 1150
Repairs 150 270 320
Partner Drawings 1500 1500 1500

Taxation Provision 3500 3750 4000
Total Payments 54900 59620 65870
Opening Bank
Balance
21000 40100 67280
Net Cash Flow 19100 27180 32030
Closing Balance 40100 67280 99310
Within the cash flow forecast performed above, first of all the cash receipts that are
expected to be generated from different sources within the months of April, May and June. After
adding up all the income from different sources, all the payments needed to be made for carrying
out the operations of the business has been listed. Accordingly, net flow of cash at the end of
each month has been determined by finding out the difference between total receipts and total
payments of respective months. Further, by adding opening balance of each month to their
respective net cash flow gives us the closing balance with the business at the end of each month.
The above cash flow forecast reflects that the business is viable in terms of having
sufficient liquidity towards meeting their external obligations and commitments towards
suppliers of funds and goods.
Financing through PFI (Private Finance Initiative)
PFI is a way of obtaining finance from private firms by public sector organizations in an
attempt to finance their expansion and diversification needs. To obtain finance for new surgery,
PFI is a good source and beneficial for both private and public sector. The reasons for being PFI
as suitable source of financing are as follows:
 The problem that were faced earlier of higher development costs associated with the
scheme because of their complexity & drawn out procurement has been overcome
governmental action of standardized contract documentation which have resulted in
streamlined process of procurement (Khaderi and et.al., 2019).
 The issue of making super-profits by companies within the private sector at the cost of
public sector has been overcome through addressing loopholes that are allowing private
sector companies to earn super-profits by governmental action that aims to close such

loopholes. Accordingly, public sector are now able to earn additional income instead of
paying higher revenue expenditure.
 Concerns associated with terms & conditions over staff who are required to get
transferred from public sector to private sector can be avoided easily through new
regulations that are being introduced by government for the protection of interest of these
staff (Shaw, 2018).
Due to above all these advantages resulting from governmental actions in an
attempt to protect those public sector concerns who are going for financing their operations
through PFI, it can be said that PFI is a suitable way of financing a new surgery.
Explanation of liabilities of equity partners with reference to practising accounts and tax
Within UK, Partnership Act has been passed in 1890 by the parliament in an attempt to
govern the duties & rights of corporate entities and people who are conducting their business in
partnership. Furthermore, the act has defined the term partnership in the context of business as
“the association between persons who are agreed upon doing business with a common view of
earning profits.” Accordingly, there are certain liabilities that could arise on account of practising
accounting and taxation by being an equity partner in a partnership agreement, such as the
following:
In UK, partners are liable for making payment towards outstanding obligations and debts
of the partnership business and in the event of death of a partner, their estate become liable
severally. Accordingly, in several events partners become either jointly or severally liable for the
towards the external parties of the business (Repiquet, 2018).
There could be a salaried as well as equity partner where the latter act as a self –
employed person and accordingly, taxed under Schedule D of the income tax act 1997. Further,
to determine the tax to be paid by partners, each partners are considered as an individual who is
carrying on their trade severally and accordingly, taxation of partners is being determined.
Also, assessment of undistributed profits of a partnership firm is done on the basis of
standard tax rate applicable on a precedent acting partner under tax compliance act 1997 (Bailey
and Munro, 2018).

REFERENCES
Khaderi, S. S., and et.al., 2019, November. Tendering Issues and Improvement in Public
Infrastructure Project Through Public-Private Partnerships (PPP)/Private Finance
Initiative (PFI). In IOP Conference Series: Earth and Environmental Science (Vol. 385,
No. 1, p. 012048). IOP Publishing.
Shaw, E., 2018. What matters is what works: the Third Way and the case of the Private Finance
Initiative. In The Third Way and Beyond (pp. 64-82). Manchester University Press.
Repiquet, M. D., 2018. Report from United Kingdom: UK Private Fund Limited Partnership
2017-Preserving UK Reputation Post-Brexit. Eur. Company L., 15, p.97.
Bailey, J. and Munro, B., 2018. Partnerships, Joint Ventures and Duties of Disclosure: The
University Court of the University of St Andrews v Headon Holdings Limited.