National 5 Bus Mgt Cash Budgets

What is the name of the document which is used to show future income and expenditure for a business?

• Cash budget
• Cash statement
• Income statement
• Income budget

What is NOT a benefit of preparing a cash budget?

• helps determine profits for owners and shareholders
• ensures there will be enough cash to pay employees and suppliers
• will help business plan when to invest in new equipment
• helps to plan a bank overdraft or additional funding in advance of when needed

What name is given to the situation of having excess cash expected at the end of next month?

• Cash surplus
• Cash deficit
• Cash profit
• Cash loss

What name is given to the situation of having a negative cash balance expected at the end of next month?

• Cash surplus
• Cash deficit
• Cash profit
• Cash loss

Cash flow problems can be resolved by reducing expenses. Which is NOT a way of reducing expenses below?

• Implement new advertising campaign to increase sales
• Reducing overtime for staff and paying off temporary staff
• Finding a new supplier who will offer bulk buying discounts
• Delaying purchase of a new asset

It is also possible to help a cash flow issue by looking at income. Which is NOT a way of helping to resolve cash flow issues?

• Allowing customers a longer credit period
• Having a special offer for a limited period
• Offering customers a discount for payment by cash
• Selling invoices to a tradefactoring company

Identify the action below which would NOT help a cash deficit situation?

• Implement tighter inventory control and reduce wastage
• Negotiate a temporary overdraft with the bank
• Sell unwanted assets
• Award bonuses to staff to help motivate them

What action would NOT be taken if a cash surplus is predicted?

• Invest in new machinery to improve efficiency
• Arrange a bank loan at a discounted rate
• Consider growing the business by opening a new branch
• Pay off outstanding bank loans to reduce interest payments 

Which of the following does NOT appear in a cash budget statement?

• Opening balance
• Profit
• Income
• Expenses

Which statement is correct when calculating a cash budget?

• Opening balance + income  - expenses = closing balance
• Opening balance - income + expenses = closing balance
• Closing balance - income + expenses = opening balance
• Closing balance + income- expenses = opening balance