CFAI Mock afternoon session why, into, afternoon, existing, increase

prashantsahni

No.17: what does the question mean by ‘require to cap expenses at 15% above budget’?, why does that tell us he doesn’t need to inform the partners of the increase in cost is not higher than the 15% budget variance contingency agreed?
Also, No.53: why using shortterm debt to reduce an existing account payable won’t increase CFO?
should shortterm debt be classified into CFF?

robjames1984

on # 17, cap means he cannot spend beyond 15%. Therefore, once he reached 50% mark, does he have a duty to inform anyone??  the answer is NO  
am not sure abt 53
Good Luck!

atate2007

question 17  Basically he has to inform them if the costs go over 15 percent, since the lighting fixtures were only 5 percent of total costs, the 50 percent increase is immaterial to report to the bosses.

studyn

Q 53
You create a short term liability of say $100,000 and wipe out your AP of $100,000. You still have the same SHORT term liabilities. You do however shift the from expense (100% CFO impact) to liability (CFF principle + small CFO impact for 1 yr. interest).
I think this actually DOES help your CFO but compared to the other 2 options, it will help your CFO the least.

manasib

thanks all for ur help!!
@Matt: i think this totally makes sense…some answers given on MOCK is just not good..