SADDLE: LO3 BE ABLE TO CARRY OUT FINANCIAL RECORD KEEPING D3

What is the purpose of constructing a cash flow forecast?

• To identify how much money will be left in the bank account

• To predict all the money expected to enter and leave a business's bank account

• To pay bills and expenses

• To attract investors and secure loans

What is the primary type of cash inflow for most businesses?

• Capital from investors

• A loan from a bank

• Property rental

• Customer payment for goods or services

What is the main form of expenditure for most businesses?

• Utilities (gas, electricity, telephone)

• Materials for manufacturing

• Staff wages

• Insurance

What can happen if a business runs out of cash?

• It can go bankrupt or insolvent

• It can attract more investors

• It can secure a loan from a bank

• It can increase its prices

What can affect the accuracy of cash flow forecasts?

• False assumptions about what will happen

• Changes in costs and expenses

• Breakdown of machinery

• All of the above

What do businesses show cash flow forecasts to when trying to get loans and finance?

• Suppliers and employees

• Competitors

• Banks and venture capitalists

• Shareholders

What is the closing balance at the end of a month used for in a cash flow forecast?

• To calculate the net cash flow

• To predict when the business will be short of cash

• To arrange a loan or overdraft

• To calculate the opening balance for the following month

What is the term used for money flowing in and out of a business?

• Cash inflows and cash outflows

• Cash budget

• Cash flow forecasting

• Cash balance

What is the closing balance at the end of a month used for in a cash flow forecast?

• To calculate the net cash flow

• To predict when the business will be short of cash

• To arrange a loan or overdraft

• To calculate the opening balance for the following month

What can affect the accuracy of cash flow forecasts?

• False assumptions about what will happen

• Changes in costs and expenses

• Breakdown of machinery

• All of the above