Cash Flow and Income Statements Quiz

Which of the following is considered a cash inflow for a business?

• Paying wages to employees

• Purchasing goods for cash

• Sale of assets

• Paying off a bank loan

If a customer pays off their outstanding bill, this transaction is categorized as:

• Cash inflow

• Cash outflow

• Neither

• Both

When a business repays a loan, it is considered:

• Cash inflow

• Cash outflow

• Profit

• Revenue

Which of the following transactions would decrease cash flow?

• Selling additional shares

• Receiving payments from debtors

• Purchasing new equipment for cash

• Obtaining a loan

What is the primary purpose of recording cash inflows and outflows?

• To calculate profit

• To assess the liquidity of the business

• To increase revenue

• To attract investors

What are accounts in a business?

• Financial records of a firm's transactions

• Professionally qualified people managing finance

• A summary of annual sales

• The final balance in a bank account

The formula to calculate profit is:

• Revenue - Expenses

• Revenue + Expenses

• Assets - Liabilities

• Cash Inflows - Cash Outflows

Which of the following is NOT a reason why profit is important to a private sector business?

• Reward for enterprise

• Source of finance

• Indicator of success

• To pay off debts to creditors

What is the main difference between profit and cash?

• Profit is always in cash, while cash is only in profit

• Profit can include credit sales, but cash is only the money received

• Cash is calculated annually, while profit is calculated monthly

• There is no difference

An income statement shows:

• The profit or loss of a business over a year

• The total assets of a business

• The cash flow of a business

• The organizational structure of a business