Budgets

Budgets

A cash budget forecasts closing cash from opening cash, expected receipts and expected payments. It is not a VAT invoice.

CAPS

Grade 12 · Accounting · Budgets

Accounting is a system: document, journal, ledger, then the statement.

  • The papers

    Grade 12 Paper 1 is company financial statements, cash flow, and analysis with audit and ethics. Paper 2 is reconciliations, VAT, inventory and manufacturing or fixed assets as the paper sets them.

  • The logic

    Assets equal owner’s equity plus liabilities. Every entry needs a source. VAT on sales is output VAT. VAT on qualifying purchases is input VAT. Profit is not the same as cash.

  • The relation

    Closing cash = opening cash + receipts − payments. A cash budget for the period

  • How a marker reads it

    Do not calculate 15% VAT on the receipts. This question is a cash budget.

Each paper is 150 marks. A foreign total that does not balance is wrong even if the individual entries look neat. Show the note or the calculation the face of the statement came from.

Worked example

A guest house in Knysna expects to open the month with R6000. Receipts should be R26000 and payments R18000. Calculate the expected closing cash.

Before any working — hunt first

Given

Numbers and units already in the sentence: R6000 · R26000 and · R18000. Copy each one into a column. A name without a number is not given.

Missing

After you copy the given, the letter that still has no number is missing. The paper is pointing at: the expected closing cash. Circle that word — that is the missing variable.

Find

We are required to find: the expected closing cash. Write that as a symbol on the left, with a question mark, before you touch a formula.

Calculate

Write Closing cash = opening cash + receipts − payments with empty letters. Cross out every letter that already has a number. Calculate the letter that is still standing — that gives the expected closing cash.

Simplified approach

A cash budget forecasts closing cash from opening cash, expected receipts and expected payments. It is not a VAT invoice.

Culture note

A guest house in Knysna, planning next month's cash.

Formulas

Closing cash=opening cash+receipts−payments

A cash budget for the period

Step 1 / 6

Opening

Cash at the start is R6000.

Why this step: We only do one job per line so a marker can follow the marks — and so you can find a slip without starting over.

4. Step-by-step working

  1. 01

    Closing

    Closing cash=R6000+R26000−R18000=R14000.

    Opening+receipts−payments
  2. 02

    Step F — Box the answer with its unit

    Closing cash=R6000+R26000−R18000=R14000.

More worked examples

Board walkthroughs on this topic. Open one, copy the working, then try the next.

Example 1 / 20

Credit sales were R60 000 in January and R80 000 in February. Debtors pay 40% in the month of sale and 55% in the following month; 5% become bad debts. Calculate the cash expected from debtors in February.

4. Step-by-step working

  1. 01

    Multiply

    40%×80 000=R32 000.

    0,40×80 000=32 000
  2. 02

    Multiply

    55%×60 000=R33 000.

    0,55×60 000=33 000
  3. 03

    Add

    32 000+33 000=R65 000.

    32 000+33 000=65 000

How we got there

Read this like a teacher at the board. We go slowly, name every number, and say why we take each step.

Explain in another language · 11

1. What is the question asking?

Read the question twice. Circle the unknown. Underline every number and unit. The paper is asking: Credit sales were R60 000 in January and R80 000 in February. Debtors pay 40% in the month of sale and 55% in the following month; 5% become bad debts. Calculate the cash expected from debtors in February.

In other words — as if you have never seen this before

If you have never seen this before: February receipts = 40% of February's sales + 55% of January's sales. Bad debts are never received. We will name a method in words, write the formula with no numbers, then substitute one line at a time.

2. What do we already know?

Jan R60 000, Feb R80 000. 40% same month, 55% next month, 5% bad.

3. Which method — and why this one?

February receipts = 40% of February's sales + 55% of January's sales. Bad debts are never received.

4. Step-by-step working

  1. 01 / 06

    Multiply

    40%×80 000=R32 000.

    0,40×80 000=32 000

    Why this step: We only do one job per line so a marker can follow the marks — and so you can find a slip without starting over.

  2. 02 / 06

    Multiply

    55%×60 000=R33 000.

    0,55×60 000=33 000

    Why this step: We only do one job per line so a marker can follow the marks — and so you can find a slip without starting over.

  3. 03 / 06

    Add

    32 000+33 000=R65 000.

    32 000+33 000=65 000

    Why this step: We only do one job per line so a marker can follow the marks — and so you can find a slip without starting over.

  4. 04 / 06

    Step G — Sense-check the size

    Ask: is this the kind of number a Grade 10–12 paper would want? A speed of 3 000 ms for a learner walking, or a probability bigger than 1, means a unit or algebra slip. Estimate first: round the numbers and do the sum in your head.

    Why this step: Markers write ‘unrealistic’ in the margin when the method is right but the size is wild. A 10-second head check often finds a missing 10² or a unit that never changed.

  5. 05 / 06

    Step F — Box the answer with its unit

    R65 000 from debtors in February.

    Why this step: A number without a unit is half a mark on a Physics paper, and a marker can miss a Maths answer that is buried in working.

  6. 06 / 06

    Step H — What the marker is looking for

    On an NSC memo you usually earn: (1) a method mark for naming the right formula or idea in words, (2) an accuracy mark for substituting the given numbers with units, (3) an accuracy mark for the boxed answer with its unit. Write those three lines even if you are unsure of the arithmetic — blank pages score zero.

    Why this step: First-timers chase the final number and leave the method blank. The memo still pays out for the idea and the substitution even when the last line is wrong.

5. The answer

R65 000 from debtors in February.

Copy onto your answer sheet — in this order

Formula: 0,40×80 000=32 000

Answer: R65 000 from debtors in February.

6. Check it like a marker

Depreciation and bad debts never appear in a cash budget because no cash moves.

7. A trap first-timers fall into

First-timers often grab the first formula they remember, mix units (cm with m, minutes with seconds), or drop a minus sign. Write the formula in words first: “this equals that, because…”

Ntsako · fx-991ZA PLUS. Tap to calculate.