Business Finance (Distinction) - Cash Budget, Accounting Equation, Stock Exchange, Stakeholders, Cash vs Profits

Finance (Distinction)

Table of Contents
TASK- 1...........................................................................................................................................3
Detect the transactions which can be involved in cash budget. Also produce it for three
months....................................................................................................................................3
TASK- 2...........................................................................................................................................5
Explain Accounting equation. Also explain the reason of its correct application every time.
Also, give example.................................................................................................................5
Mention the benefits of listing down the shares in stock exchange.......................................5
Identify the stakeholders in large listed companies like Marks and Spencer........................6
Can profits be considered as a reliable indicator of the cash balance. Evaluate along with
providing the difference among them.....................................................................................8
REFERENCES..............................................................................................................................10

TASK- 1
Detect the transactions which can be involved in cash budget. Also produce it for three months.
Cash budget refers to the statement produced by the organisation for all the expected
outflow and inflow of money that can take place in a particular time period. In this budget, only
that transactions are recorded that have happened in cash and that too at the time when it has
actually incurred in money. The entries which would be recorded in statement are mentioned
below along with their explanations.
 The amount which is invested in the business is recognised as inflow of money in
business so, it is recorded in cash budget (Bay and McGoun, 2018).
 A plan for withdrawing of a particular fixed amount on each personal use does not
attracts any money flow, so it will be given importance, only of anything it bought for
itself by the person from business money.
 In this transaction, the computer is purchased for personal use only. So their is a need of
recording planned figure of £ 800 as drawings.
 Purchasing computer for use in business should be recoded as outflow of money. Thus
this is also needed to be recorded.
 Motorcycle bought is to be recognised as a business expense.
 As per the policy, the sales of 30% is recorded in the same month and the remaining is
accounted for the next coming month. Thus, this will be recorded at that time only.
 The purchases made in cash will be given space in the cash budget as it related to the
business and is paid.
 All the expenses are joint with the company and should be recorded in this budget only.
Cash Budget for three months for the year ending 31st March, 2022
Particulars January (£) February( £) March (£)
Receipts
Capital 10000
Cash receipts from sales 1260 960 885
Receipts from credit sales 2940 2240
Total cash receipts (A) 11260 3900 3125