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LM is preparing its cash forecast for the next three months.
Which of the following items should be left out of its calculations?
Suggested Answer: C
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38 comments · newest first
TO
Tonette
11 months ago
Not sure about the rental payment, feels like it should count.
SI
Simona
11 months ago
New bank loan should be included, right?
DY
Dylan
11 months ago
Wait, are we really ignoring the expected loss on land? Seems important.
CL
Claudio
12 months ago
I agree, that shouldn't affect the forecast.
AL
Alica
12 months ago
Definitely leave out last year's tax payment!
BO
Bobbye
1 year ago
The rental payment on the leased vehicle seems like it should definitely be included in the forecast, but I can't recall if the tax payment is relevant.
CR
Cristal
1 year ago
I remember a practice question where we had to consider only current cash inflows and outflows, so maybe the bank loan should be included?
FR
France
1 year ago
I'm not entirely sure, but I feel like the expected loss on the land might be something we shouldn't include either.
SV
Svetlana
1 year ago
I think we should exclude the tax payment related to last year's profits since it doesn't affect current cash flow.
NA
Nada
1 year ago
I've got a good feeling about this one. I'll start by considering each item and whether it's a cash inflow or outflow, and then determine if it's relevant for the short-term cash forecast.
EL
Elza
1 year ago
Okay, let's see. I think the key is to distinguish between operating cash flows and financing/investing activities. The tax payment and rental payment are likely operating, while the new loan and land disposal are more financing/investing.
RO
Ronald
1 year ago
Hmm, I'm a bit unsure about this one. I need to think carefully about which items would be relevant for the cash forecast versus those that are more long-term or one-time in nature.
CO
Cornell
1 year ago
This seems pretty straightforward. I'd focus on identifying the items that are not directly related to the cash forecast for the next three months.
RA
Rashad
2 years ago
Is this a trick question? I mean, who forgets to include rental payments in their cash forecast? That's like Accounting 101!
LI
Lili
2 years ago
Jade: Yeah, I see your point. It's important to focus on cash inflows and outflows that are directly related to the business operations.
GR
Gracia
2 years ago
User 3: I'm not sure, but I think the tax payment due from last year's profits should be left out.
JA
Jade
2 years ago
User 2: I think the item that should be left out is the expected loss on the disposal of the piece of land.
KE
Kent
2 years ago
User 1: I agree, rental payments should definitely be included in the cash forecast.
MA
Mariann
2 years ago
I'm going with D. Rental payments are an operating expense and are crucial for the cash forecast.
AN
Annette
2 years ago
C) Expected loss on the disposal of a piece of land.
RE
Refugia
2 years ago
B) Receipt of a new bank loan raised for the purpose of purchasing new machinery.
RO
Rozella
2 years ago
A) Tax payment due, that relates to last year's profits.
JO
Joye
2 years ago
Ha! Rental payments on a leased vehicle? That's a no-brainer. Of course that should be included in the cash forecast.
HU
Hubert
2 years ago
Hmm, I'm not sure. But I do know that taxes and losses on disposals are definitely cash flow items that should be included.
OC
Ocie
2 years ago
D) Rental payment on a leased vehicle.
DO
Donte
2 years ago
C) Expected loss on the disposal of a piece of land.
EL
Elenor
2 years ago
B) Receipt of a new bank loan raised for the purpose of purchasing new machinery.
CH
Chantay
2 years ago
A) Tax payment due, that relates to last year's profits.
JA
Janessa
2 years ago
But what about the tax payment due? Shouldn't we include that in our calculations?
LI
Lili
2 years ago
I agree with Yasuko. It's a one-time loss that shouldn't affect our cash forecast.
YA
Yasuko
2 years ago
I think we should leave out the expected loss on the disposal of the land.
LO
Louann
2 years ago
I think the answer is B. A new bank loan is a financing activity and should not be included in the cash forecast.
BE
Bernadine
2 years ago
C is a non-cash item and should be excluded from the calculations.
RE
Reita
2 years ago
A is definitely important to consider for cash forecast.
LE
Leonardo
2 years ago
I think D should also be left out, as it is a regular expense.
AN
Andree
2 years ago
I agree, B should be left out of the calculations.
RO
Roosevelt
2 years ago
Yes, it is a financing activity and not part of the operating cash flow.
KA
Kallie
2 years ago
I agree, the new bank loan should not be included in the cash forecast.