Grade 11 Business - Finance

Which of the following is an example of a cash outflow for a business?

• a) Payments to creditors

• b) Sale of goods for cash

• c) Payment from debtors

• d) Receiving a loan from the bank

Complete this statement with the best option: ‘The longer the cash-flow cycle….’

• a) the less cash the business will need

• b) the lower will be the firm’s working capital needs

• c) the less chance there is for the business to run out of cash

• d) the more working capital and cash the business will need

All of the following would be included in a typical cash flow forecast except:

• a) cash sales

• b) opening balance

• c) monthly profit

• d) net cash flow

A firm is forecast to have a negative closing bank balance in three months time. Which of the following measures would help to reduce the problem?

• a) Sell more goods on 4 months credit

• b) Produce more goods

• c) Ask customers to pay in cash and not sell goods on credit

• d) Ask suppliers if the firm can pay for goods delivered in cash

The closing bank balance is calculated by:

• a) opening bank balance + cash out-flow

• b) opening bank balance + cash in-flow

• c) opening bank balance + net cash flow

• d) net cash flow + gross profit.

Which one of the following statements is correct?

• a) Assets are items of value owed by a business

• b) Liabilities are items of value owned by a business

• c) Share capital is the total value of the business

• d) Assets are items of value owned by the business

Which of the following is a current asset?

• a) Buildings

• b) Creditors

• c) Machinery

• d) Debtors

All of the following would be found on the current liabilities section of a firm’s balance sheet except:

• a) overdraft

• b) creditors

• c) debtors

• d) tax to be paid in three months time

Working capital is calculated by:

• a) current assets – fixed assets

• b) current liabilities – current assets

• c) fixed assets – current assets

• d) current assets – current liabilities

Capital employed is obtained by adding together ‘shareholders funds’ and ‘long-term liabilities’. Which of the following would not be included in this addition?

• a) Profit and loss reserves

• b) Loans

• c) Working capital

• d) Share capital