What is the main difference between cash and profit?

Cash is daily money flow, while profit is the surplus after costs

Cash is the surplus after costs, while profit is daily money flow

Cash is used for long-term projects, while profit is for short-term

Cash is recorded in the balance sheet, while profit is in the income statement

Which of the following is a consequence of running out of cash?

Business failure due to inability to pay expenses

What is working capital?

The excess of current assets over current liabilities

The total revenue generated by a business

What is the formula for working capital?

Current assets - Current liabilities

Current assets ÷ Current liabilities

Current liabilities - Current assets

Current assets × Current liabilities

What does positive working capital indicate?

Current assets exceed current liabilities

Current liabilities exceed current assets

What is a disadvantage of having too much working capital?

Opportunity cost of money tied up in stock

Difficulty paying short-term liabilities

What is a consequence of negative working capital?

Difficulty paying short-term liabilities

What is the working capital cycle?

The time between purchasing stock and receiving payment from customers

The time between paying suppliers and receiving raw materials

The time between selling products and paying wages

The time between borrowing money and repaying loans

How can a business improve its working capital cycle?

By speeding up production and reducing inventory holding time

By delaying payments to suppliers

What is the main risk of having too little working capital?

Difficulty paying short-term liabilities

What is revenue expenditure?

Spending on everyday running costs

Spending on shareholder dividends

What is capital expenditure?

Spending on daily operating costs

How is revenue expenditure recorded in financial statements?

As an expense in the income statement

As an asset in the balance sheet

As a liability in the balance sheet

How is capital expenditure recorded in financial statements?

As an asset in the balance sheet

As an expense in the income statement

As a liability in the balance sheet

What is the main difference between revenue and capital expenditure?

Revenue expenditure is for short-term costs, while capital is for long-term assets

Revenue expenditure is for long-term assets, while capital is for short-term

Revenue expenditure is recorded in the balance sheet, while capital is in the income statement

Revenue expenditure is for non-current assets, while capital is for current assets

Which of the following is a consequence of high capital expenditure?

Higher long-term assets and potential growth

Increased daily operating costs

Increased short-term liabilities

A court judgment that an individual or business cannot pay debts

The dissolution of a limited company

The process of selling assets to pay liabilities

The protection of a business from creditors

The dissolution of a limited company and sale of assets

The protection of a business from creditors

A court judgment that an individual cannot pay debts

The process of renegotiating debts

What is administration?

The protection of a business from creditors for a period

The dissolution of a limited company

A court judgment that an individual cannot pay debts

The process of selling assets to pay liabilities

What is the main risk of negative working capital?

Difficulty paying short-term liabilities

Which of the following is a way to avoid business failure?

Maintaining positive working capital

What is the main purpose of administration?

To protect the business from creditors for a period

To sell assets to pay liabilities

Which of the following is a consequence of liquidation?

Assets are sold to pay liabilities

The business continues to operate

The business is protected from creditors

The business renegotiates its debts

What is the main difference between bankruptcy and liquidation?

Bankruptcy applies to individuals, while liquidation applies to companies

Bankruptcy applies to companies, while liquidation applies to individuals

Bankruptcy involves selling assets, while liquidation involves renegotiating debts

Bankruptcy protects the business, while liquidation dissolves it

What are trade receivables?

Amounts a business is yet to receive from customers

Amounts a business needs to pay to suppliers

What are trade payables?

Amounts a business needs to pay to suppliers

Amounts a business is yet to receive from customers

How can a business improve its cash flow by managing trade receivables?

By asking customers to pay more quickly

By delaying payments to suppliers

What is the main purpose of managing trade receivables and payables?

To improve cash flow and working capital

Which of the following is a consequence of poor management of trade receivables?

Difficulty collecting payments from customers

What is the main benefit of managing trade payables effectively?

Improved relationships with suppliers

Which of the following is a way to reduce the working capital cycle?

Speeding up production and reducing inventory holding time

Increasing inventory holding time

CAM UNIT 5 AS (part 1)

Authored by tran tai

Business

Professional Development

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50 questions

Show all answers

MULTIPLE CHOICE QUESTION

3 mins • 1 pt

What is start-up capital?

The money needed to expand a business

The money required to begin operating a business

The profit earned by a business

The revenue generated by a business

MULTIPLE CHOICE QUESTION

3 mins • 1 pt

Which of the following is a reason a business might need finance for growth?

To pay wages

To purchase additional premises or equipment

To cover daily operating costs

To pay utility bills

MULTIPLE CHOICE QUESTION

3 mins • 1 pt

What is overtrading?

Expanding too quickly or experiencing a downturn in sales

Making excessive profits

Paying off all debts

Reducing production costs

MULTIPLE CHOICE QUESTION

3 mins • 1 pt

Which of the following is a short-term need for finance?

Purchasing new machinery

Paying wages or utility bills

Developing a new product

Expanding into new markets

MULTIPLE CHOICE QUESTION

3 mins • 1 pt

What is the main difference between short-term and long-term finance?

Short-term finance is repayable within 12 months

Long-term finance is repayable within 12 months

Short-term finance is used for capital expenditure

Long-term finance is used for daily operating costs

MULTIPLE CHOICE QUESTION

3 mins • 1 pt

Which of the following is an example of a long-term need for finance?

Paying wages

Purchasing raw materials

Developing a new product

Paying utility bills

MULTIPLE CHOICE QUESTION

3 mins • 1 pt

What is the primary purpose of start-up capital?

To pay dividends to shareholders

To cover initial costs such as premises and equipment

To generate profit

To reduce production costs

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CAM UNIT 5 AS (part 1)

What is start-up capital?

Which of the following is a reason a business might need finance for growth?

What is overtrading?

Which of the following is a short-term need for finance?

What is the main difference between short-term and long-term finance?

Which of the following is an example of a long-term need for finance?

What is the primary purpose of start-up capital?

Which of the following is a reason a business might need finance for survival?

What is the main difference between cash and profit?

Which of the following is a consequence of running out of cash?

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