What does a cash flow forecast show?

• The total profit a business makes

• The inflows and outflows of cash over a period of time

• The value of assets a business owns

• The amount of debt a business has

Which of the following is an example of a cash inflow?

• Paying wages to employees

• Buying new equipment

• Receiving a bank loan

• Paying rent

What happens if the closing balance of a business is negative?

• The business has made a profit

• The business has more cash outflows than inflows

• The business has no expenses

• The business has no liabilities

A business receives $20,000 from sales and $5,000 from a bank loan. It spends $10,000 on expenses. What is the net cash flow?

• $15,000

• $25,000

• $10,000

• $5,000

Why might a business experience cash flow problems?

• Customers pay late

• The business has too much profit

• The business lowers its expenses

• The business receives a large investment

What is the formula for calculating net cash flow?

• Cash inflows – Cash outflows

• Opening balance + Cash inflows

• Cash outflows – Cash inflows

• Closing balance – Opening balance

A company has an opening balance of $3,000, total cash inflows of $8,000, and total outflows of $5,000. What is the closing balance?

• $11,000

• $5,000

• $6,000

• $3,000

What is an advantage of preparing a cash flow forecast?

• It guarantees higher profits

• It helps the business plan for future cash shortages

• It reduces the need for sales revenue

• It removes the risk of bad debts

Which of the following is a cash outflow?

• Selling goods to customers

• Receiving an investment from an owner

• Paying suppliers for raw materials

• Taking out a loan

What can a business do to improve cash flow?

• Offer discounts for early payments

• Increase expenses

• Stop selling goods on credit

• Delay payments to suppliers forever