Cash Flow Worksheet

Which of the following best defines cash flow for a business?

• The total amount of profit made over a year.

• The movement of cash both into and out of a business over a period of time.

• The value of assets owned by the business.

• The total sales revenue generated.

Understanding a business's cash flow is important because it helps to determine if the business can meet its short-term debts and running costs.

• True

• False

Which of the following is an example of a cash inflow (receipt) for a small retail shop?

• Paying the monthly electricity bill.

• Buying new inventory (stock) from a supplier.

• Cash received from customers for goods sold.

• Repaying a bank loan.

Paying rent for the business premises is an example of a cash inflow.

• True

• False

Which item would be classified as a cash outflow (payment) in a cash flow forecast?

• Interest received on a deposit account.

• Sales revenue from credit customers.

• Wages paid to employees.

• The business owner investing more capital.

• $14,500

• $1,500

• -$1,500

• $6,500

The net cash flow for a period is calculated by subtracting the cash outflows from the cash inflows.

• True

• False

• $2,500

• $1,500

• -$3,000

• $500

The closing balance of one month in a cash flow forecast becomes the opening balance of the next month.

• True

• False

A cash flow forecast predicts a negative closing balance for the month of June. Which of the following actions would be a practical way to improve the cash flow position in June?

• Buy more fixed assets using cash.

• Offer customers extended credit terms (more time to pay).

• Delay paying suppliers until a later month.

• Increase the wages paid to staff in June.