BTEC 2 Budgeting & Cash Flow

What is the purpose of setting sales targets in a revenue budget?

• To reduce costs

• To ensure high sales for profit

What should be higher to make a profit according to expenditure budgets?

• Revenue

• Number of employees

What does budgetary control involve?

• Checking performance to meet targets

• Increasing expenditure limits

What is the aim of controlling the budget?

• To keep the budget on track

• To reduce revenue

What happens if more money is flowing out than in?

• The business may not pay its staff or suppliers

• The business will increase its profits

Why is it important to prepare a cash flow forecast?

• To spot problems in advance

• To hire more employees

If Jane's business has total receipts of £16,000 and total payments of £10,000, what is the net inflow?

• £26,000

• £6,000

What is one action that can help improve cash flow?

• Increase stock levels

• Sell online on a cash basis

Which of the following is a risk of not forecasting cash flow?

• Surplus cash can be invested.

• Late inflows may not be identified.

Which of the following is NOT a benefit of cash flow forecasting?

• Surplus cash can be invested.

• It guarantees a profit.

• The business can plan to expand or reduce activities.