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ACCA Applied Knowledge · Management Accounting · Spreadsheets

Which of the following is the main advantage of using a spreadsheet model for a cash budget rather than preparing it manually?

The main advantage is that changes in assumptions flow through automatically because linked formulas recalculate. This allows quick what-if analysis. A spreadsheet cannot make forecasts accurate, stop formula errors, or remove the need to check the inputs.

  1. AIt removes the need to check the input assumptions
  2. BIt guarantees that forecasts will be accurate
  3. CChanges in assumptions can be reflected quickly through automatic recalculationCorrect
  4. DIt prevents formula errors from occurring

Explanation

Spreadsheets recalculate linked formulas when an input changes, allowing quick what-if analysis. They do not make forecasts accurate, remove the need to review assumptions, or prevent formula errors, which can still occur and need checking.

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