Unit 3 LA E Quiz

What is the purpose of cash flow forecasting?

• To ensure a healthy cash balance

• To calculate profit/loss

• To set targets for staff

• To negotiate with creditors

Which of the following is considered as cash inflows?

• Cash purchases

• Credit purchases

• Purchase of assets

• Bank interest received

What does the opening balance represent?

• The amount of cash at the end of the month

• The amount of cash at the start of the month

• The difference between cash inflows and outflows

• The ability of the business to meet short term cash payments

What happens when a business's outflows are greater than inflows?

• The business becomes insolvent

• The business makes a profit

• The business can negotiate longer credit periods

• The business can review capital expenditure

What is the break even point?

• The point where total revenue equals total costs

• The point where total revenue is zero

• The point where total costs are zero

• The point where profit/loss is zero

Which of the following is a variable cost?

• Rent

• Salaries

• Stock

• Bank interest received

What is the margin of safety?

• The amount of output between the actual level of output and the break even point

• The amount of profit left after all costs have been repaid

• The amount of money earned by a business by selling products

• The amount of output a business must sell to cover its costs

Why use break even analysis?

• To ensure a healthy cash balance

• To calculate profit/loss

• To set targets for staff

• To understand how different costs or prices would affect the break even point

What is the formula for calculating the break even point?

• Fixed Costs / (Price - Variable Costs)

• Total Revenue / Total Costs

• Total Costs / Total Revenue

• Variable Costs / (Price - Fixed Costs)