TMS supplies textbook to college and university bookstores. The books are shipped with the stipulation that...
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TMS supplies textbook to college and university bookstores. The books are shipped with the stipulation that they must be paid within 30 days but can be returned for a full refund credit within 90 days. In 2009, TMS shipped and billed book tiles totalling R7 600 000. Collection, net of return credits, during the year totalled R6 900 000. The company spent R3 000 000acquiring the books that it shipped. a. Using accrual accounting method, show the firm's net profit for the past year? b. Using cash flow method, show the firm's net cash flow for the past year? c. Which of these statements are more useful to the financial manager? Why? Answers: a. Sales R Cost of goods sold R Net profit R b. Cash receipts R Cost of goods sold R Net cash flow R c. Accrual Accounting Method or Financial Cash Flow Method Method: Reason: It is typical for plan, monitor and assess her financial position using cash flows over a given period, typically a month have a savings account and her bank statement loans money at 6% per year while it offers short-term investment rates of 5%. Jane's cash flow during were as follows: Item Cash inflow: Interest received R4 500 Salary R45 000 Cash outflow: Clothes R10 000 Dining out R5 000 Groceries R8 000 Vehicle payment R3 500 Utilities R2 800 Mortgage R12 000 Petrol R2 200 REQURED: a. Determine Jane's cash inflows and cash outflows. b. Determine the net cash flow for the month of August. c. If there is a shortage, what are a few options open to Jane? d. If there is a surplus, what would be a prudent strategy for her to follow? Answers: a. Total cash inflow = R Total cash outflow = R b. Net cash flow R C. d. Denzil November has invested R250 000 in SD Company. The firm has recently declared bankruptcy and has R600 000 in unpaid debts. Under each of the following situations, write whether the Denzil will have a limited or unlimited liability. a. SD Company is a sole proprietorship owned by Denzil November b. SD Company is a 50-50 partnership of Denzil November and Christopher Black. c. SD Company remains a company Answers: a. liability 9 b. liability C liability TMS supplies textbook to college and university bookstores. The books are shipped with the stipulation that they must be paid within 30 days but can be returned for a full refund credit within 90 days. In 2009, TMS shipped and billed book tiles totalling R7 600 000. Collection, net of return credits, during the year totalled R6 900 000. The company spent R3 000 000acquiring the books that it shipped. a. Using accrual accounting method, show the firm's net profit for the past year? b. Using cash flow method, show the firm's net cash flow for the past year? c. Which of these statements are more useful to the financial manager? Why? Answers: a. Sales R Cost of goods sold R Net profit R b. Cash receipts R Cost of goods sold R Net cash flow R c. Accrual Accounting Method or Financial Cash Flow Method Method: Reason: It is typical for plan, monitor and assess her financial position using cash flows over a given period, typically a month have a savings account and her bank statement loans money at 6% per year while it offers short-term investment rates of 5%. Jane's cash flow during were as follows: Item Cash inflow: Interest received R4 500 Salary R45 000 Cash outflow: Clothes R10 000 Dining out R5 000 Groceries R8 000 Vehicle payment R3 500 Utilities R2 800 Mortgage R12 000 Petrol R2 200 REQURED: a. Determine Jane's cash inflows and cash outflows. b. Determine the net cash flow for the month of August. c. If there is a shortage, what are a few options open to Jane? d. If there is a surplus, what would be a prudent strategy for her to follow? Answers: a. Total cash inflow = R Total cash outflow = R b. Net cash flow R C. d. Denzil November has invested R250 000 in SD Company. The firm has recently declared bankruptcy and has R600 000 in unpaid debts. Under each of the following situations, write whether the Denzil will have a limited or unlimited liability. a. SD Company is a sole proprietorship owned by Denzil November b. SD Company is a 50-50 partnership of Denzil November and Christopher Black. c. SD Company remains a company Answers: a. liability 9 b. liability C liability
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