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ACCA Applied Knowledge · Business and Technology · The relationship between accounting and other business functions

At Brightwell Ltd, the purchasing function regularly buys raw materials without telling the finance function the agreed payment terms. What is the most direct consequence for the finance function?

The finance function cannot accurately forecast cash outflows or plan working capital, because payment terms set when suppliers must be paid. Without this information from purchasing, finance may face unexpected cash shortages or hold excess cash, weakening liquidity management.

  1. AIt cannot accurately forecast cash outflows and plan working capitalCorrect
  2. BIt cannot recruit new production staff
  3. CIt cannot design the company's advertising campaigns
  4. DIt cannot determine the company's organisational culture

Explanation

Payment terms determine when cash leaves the business. Without them, finance cannot predict payment dates, so cash flow forecasting and working capital management suffer. The other options relate to HR, marketing and culture, which are not directly affected.

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