Companies need to budget and be aware of cash flow in order to stay solvent.
Cash is the amount of money a business holds. Which of the following describes 'cash'?
Notes and coins
Notes, coins and deposits in the bank
Which of the following is true about cash flow?
It is the same as profit
It is different from profit
It is the same as revenue
Where does the main cash inflow for most businesses come from?
Customers paying for products
Interest received on loans
Interest payments on a bank overdraft
What is net cash flow?
The difference between revenue and cost
The difference between money in and money out
The difference between assets and liabilities
Which of the following is an example of a cash inflow?
A new bank loan
Payment of a gas bill
Offering trade credit to a customer
If the opening balance is £5,000, total receipts are £4,000 and the closing balance is £3,000 then total payments are:
Which of the following hinders cash flow?
Asking debtors for payment
Repaying an overdraft
Securing better trade credit terms from suppliers
What is a long term way to improve cash inflow?
Take out a loan
Take out an overdraft
Use a factoring service
How can cash outflows be improved?
Buy extra equipment
Lease out equipment
What does a postive cash flow mean?
The business is making a loss
The business is making either a profit or a loss
The business is making a profit