Question

Question 3

1. (i) Giving specific examples, explain the term spreadsheet.   

(ii) Give three advantages of using spreadsheets in financial analysis.

(iii) Differentiate between absolute referencing and relative referencing.   

2. ‘Sales are often considered to be the principal budget factor of an organization.’ Explain the meaning of the term ‘principal budget factor.’

Answer 1

Please find below explanation and “ Don’t forget to give a like! Thank you”

a)

(i) Spread sheet:

Spread sheet is a computer program or piece of paper used for accounting and recording of

Data using rows and columns into which information can be entered

The spread sheet is one of the most popular uses of the personal computer

Examples of spread sheet:

1) MS Excel is one of the most commonly used spreadsheet packages

2) Google sheets

(ii) Three advantages of using spreadsheet in financial analysis

1) linking related data

2) Easy tracking of payments

3) They are free and require minimal training

4) useful formatting and spreadsheet functions

(iii)

Absolute referencing: An absolute cell reference is fixed and will not change when you copy the

Formula.

Relative referencing: A relative cell reference automatically changes when you copy the formula

From one cell to another.

Absolute reference is with $ sign before row and column name e.g. =$A$3

Relative reference is without $ sign before row and column name e.g. =A3

a). Principal budget factor : The principal budget factor is the factor that limits the activity for the

budget period. Normally this is the level of sales and therefore the

Sales budget is usually the first budget to be prepared and this leads to

the others.

For organisation following may be limiting factors:

1) shortage of power

2) shortage of machine

3) government restrictions