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TASK 1.1 Kashi is preparing the cash budget for the first 3 months of her business’s trading. Business is called Kashi textiles and Kashi will be investing £25,000 of her personal savings to get it started. Rest of the information is as follows:
- In January 2022, Kashi will purchase a computer and a printer for use in the business for £1,980, payable upfront.
- Kashi expects to sell the following textiles: January £4,500 to Moon Traders February £6,890 to Hans Traders March £5,670 to Down Town shops.
- Kashi expects to make the following purchases of textiles over the next three months: January £3,280 for Moon Traders supplies February £5,120 for Hans Traders supplies March £4,100 for Down Town shops’ supplies
- All sales will be made for cash.
- Purchases: 10% payment in the same month, 50% payment next month and remaining payment in 2 months’ time.
- Kashi will need to hire a printing machine to print her logos and the hiring charges will be £250 per month, payable in the same month. Hiring will be made in January and will be needed for all the subsequent trading months.
- Kashi has agreed to pay £250 per month to an accountant for his advice and preparation of accounts.
- Other expenses have been estimated as follows: £100 on delivery costs per month, payable at the end of each month. £425 on telephone costs per quarter, payable at the end of the quarter. £250 on other expenses, such as electricity and insurance, payable at the end of each month.
- Kashi will be withdrawing £700 per month to cover her personal expenses.
Prepare the cash budget for Kashi textiles for first 3 months’ of trading from January to March, 2022.Show your workings separately. (25 Marks)
TASK 2 (75 Marks)
A. Define a Company. Explain its features and also explain advantages and disadvantages of forming a public company. (25 Marks)
B. Discuss the crucial importance of cash to a business. Is the profit that a business makes a reliable indicator of its cash balances? (15 Marks)
C. What is the reason for the existence of Corporate Governance? Discuss some principles of good governance as described by the Corporate Governance Code. (20 Marks)
D. Define Gearing and explain its advantages and disadvantages. Why might a bank be interested in a company’s level of gearing? (15 Marks)