Cash-flow

Which cost is likely to vary with the number of units produced?

• Rent

• Packaging costs

• Insurance

• Management salaries

What type of cost is rent usually classified as?

• Variable cost

• Fixed cost

• Direct cost

• Indirect cost

What type of cost is associated with raw materials?

• Fixed cost

• Variable cost

• Indirect cost

• Sunk cost

Which of the following is a source of cash inflow?

• Revenue from cash sales

• Office maintenance

• Employee training

• Insurance premiums

What are cash outflows?

• The flows of money into a business.

• The flows of money out of a business.

• The profits generated by a business.

• The investments made by a business.

If a business makes a profit of £4500, how much tax will it pay at a rate of 20%?

• £900

• £800

• £1000

• £850

Why do businesses have to forecast the flow of cash in and out of the business?

• To ensure they have enough cash to meet obligations

• To increase their profit margins

• To reduce employee salaries

• To expand their product line

What impact would sales variation have on the importance of cash-flow forecasting?

• It makes forecasting less important

• It increases the importance of forecasting

• It has no impact on forecasting

• It decreases the need for forecasting

What is the primary purpose of a cash flow statement?

• To show the profitability of a business

• To calculate the net worth of a business

• To track the cash inflows and outflows over a period

• To list all assets and liabilities

How does an increase in production volume typically affect variable costs?

• Variable costs remain constant

• Variable costs decrease

• Variable costs increase

• Variable costs become fixed