BPP - Performance Management question

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In the BPP book (new standards) on page 355 there is an activity examining "what if" scenarios, Activity 13.8<BR><BR>Can someone please tell me why the cash balance is revised only taking account of increase in revenues and not in costs? Surely assuming the same credit terms this should be taken into account?<BR><BR>Therefore my answer for the revised cash balance would be <BR><BR>Original balance 20,000<BR>Add additional profit (and not revenue) 45,000<BR>Add reduction in debtors 125,000<BR><BR>Revised cash balance 190,000<BR><BR>I would really appreciate your views, as I have no tutorial support.<BR>Thank you very much<BR><BR>Edit

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BPP - Performance Management question

Edit<BR>You have worked this out correctly.<BR>I have read the question and can see the area of ambiguity is the question of creditor payments.<BR>You have assumed that Materials, Labour, and Selling costs are all paid as they are incurred. And why not? the question does not say whether or not this is the case.<BR>I would expect the Labour and variable Selling costs to be paid within a month of being incurred and consider your answer is good.<BR>Beepy Pea used to be a contributor on the old forum, but I have not seen his name recently. <BR>I suspect that activity 13.8 has been cut-down from a more detailed question and not tested before being put into the book.<BR><BR>If I can be of any further help contact me <BR>sandy.hood@chichester.ac.uk<BR><BR>Sandy