wayground logo

Free Printable Worksheets

Font size

S
M
L
XL
Worksheets

Cash flow - unit 3 - business finance

Total questions: 66

Worksheet time: 33mins

Name
Class
Date
1.

A firm purchased raw materials on account and paid for them within 60 days. The raw materials were used in manufacturing a finished goods sold on account 100 days after the raw materials were purchased. The customer paid for the finished good 30 days later. The firm’s cash conversion cycle is ________ days.

a)

10

b)

70

c)

130

d)

200

2.

If a firm purchased goods on credit, the firm would usually pay the bill when?

a)

as soon as possible

b)

before the credit period ends

c)

on the last day of the credit period

3.
What is start up capital?
a)
Finance needed before starting trading.
b)
Finance paid after trading.
c)
Finance paid to banks.
4.
Profit is important to businesses because:
a)
it improves businesses, cash balances
b)
it can be used to measure business size
c)
it is a measure of businesses, success
d)
businesses need to pay taxes to the government
5.
What is capital expenditure?
a)
Money spent for fixed assets which last about 6 months.
b)
Money spent for fixed assets which last about for more than a year.
c)
Money spent on a day-to-day basis.
d)
Money spent per hour rate.
6.
What is asset?
a)
An item of property owned by a person or company
b)
An item owned by a business that lasts for several years.
7.
What is revenue expenditure?
a)
Money spent on monthly expenses
b)
Money spent on hour to hour expenses
c)
Money spent on day to day expenses
d)
None of the above
8.
What is NOT a source of Internal finance?
a)
Retained profit
b)
Sale of existing assets
c)
Issue of shares
d)
All are sources of Internal finance
9.

The amount of cash moving into and out of a business

a)

Cash Flow

b)

Net Worth

10.

Money received from a business investor would be an example of

a)

cash inflow

b)

cash outflow

11.

selling an asset would be an example of

a)

cash inflow

b)

cash outflow

12.

paying the rent would be an example of

a)

cash inflow

b)

cash outflow

13.

purchasing an asset would be an example of

a)

cash inflow

b)

cash outflow

14.

Ideally, the net cash flow should be

a)

positive

b)

negative

15.

One way that a firm could increase the amount of cash it has on hand is to reduce ____________

a)

Credit

b)

Outflows

c)

Inflows

d)

Insolvency

16.

Why is this firm's level of cash increasing?

a)

There is more cash inflow compared to outflows

b)

There is less cash inflow compared to outflows

c)

The firm is profitable

d)

The firm is unprofitable

17.

If a company sells 400 units of their product at an average price of £15 per unit, what is their total revenue?

a)

£6,000

b)

£4,500

c)

£4,000

d)

£7,500

18.
A firm produces 500 units at a total cost of $2,000. What is their average total cost of production?
a)
$4 per unit
b)
$5 per unit
c)
$3 per unit
d)
$2 per unit
19.
If a cashflow forecast suggests that a firm will run out of cash, which would help the problem?
a)
purchase more fixed assets
b)
repay a bank loan
c)
pay suppliers immediately
d)
delay paying suppliers
20.
Which of the following is true about cash flow?
a)
It is the same as profit
b)
It is different from profit
c)
It is the same as revenue
21.

What is the purpose of a cash flow forecast?

a)

To calculate profit or loss

b)

To find out whether a business has enough cash to pay their bills

c)

To find out when customers are going to pay their invoices

d)

To see if the business will break even

22.
Which is the best explanation for a business running into cash-flow problems?
a)
demanding quick payment from customers
b)
allowing customers a long credit period
c)
delaying payments to suppliers
d)
producing goods when demanded by customers
23.
Which of the following is NOT a use of cash-flow forecasts?
a)
They indicate how much cash is available for paying bills
b)
They show how much the bank needs to lend to stop insolvency
c)
They indicate whether the business is holding too much cash
d)
They indicate how much profit the business will make
24.
Business cash flow forecasts are of use in all of the following situations except:
a)
calculating last year’s profit or loss
b)
finding out how much cash will be needed to start a business
c)
keeping informed about the liquidity of the business
d)
helping the manager to plan when to borrow money
25.

Government Grants

a)

Cash Inflow

b)

Cash Outflow

26.

Paying for raw materials for your product

a)

Cash Inflow

b)

Cash Outflow

27.

Buying Machinery

a)

Cash Inflow

b)

Cash Outflow

28.

Which one of the following ISN’T a way of cash outflow?

a)

Purchasing goods & services

b)

Paying wages, salaries and expenses

c)

Paying creditors

d)

Borrowing money from external sources

29.
What is a long term way to improve cash inflow?
a)
Take out a loan
b)
Take out an overdraft
c)
Use a factoring service
30.

Grants usually come from

a)

Big businesses

b)

Governments

c)

Loans

d)

Small Businesses

31.

Leasing or hire purchase you own the item immediately

a)

True

b)

False

32.

Overdrafts are used for short term finance

a)

True

b)

False

c)

Both

33.

Which 2 examples are internal finance

a)

Sales of assets

b)

Grants

c)

Retained profits

d)

leasing

34.
A firm is forecast to have a negative closing bank balance. Which would reduce the problem?
a)
sell more goods on 4 months credit
b)
produce more goods
c)
ask customers to pay in cash and not sell goods on credit
d)
ask suppliers if the firm can pay for goods in cash
35.

A cash flow statement shows an overview of money flowing in and out of a company

a)

True

b)

False

36.
Which of the following is an example of a cash in-flow for a business?
a)
payment to suppliers
b)
paying back a loan to a bank
c)
payment from debtors
d)
purchase of fixed assets
37.

Assume a firm sells goods costing £40,000 for £55,000. It provides the customer

with 70% trade credit (i.e. the customer pays only 30% of the price as a down

payment). The profit earned is __________, and the cash received is _________.

a)

£15,000, £12,000

b)

£15,000, £16,500

c)

£15,000, £28,000

d)

£15,000, £55,000

38.

What is the money available to pay for day to day operational costs called?

a)

Cash

b)

Working capital

c)

Profit

d)

All of the above

39.
The closing bank balance is calculated by:
a)
opening bank balance + cash out-flow
b)
opening bank balance + cash in-flow
c)
opening bank balance + net cash flow
d)
net cash flow + gross profit
40.
The monthly net cash flow for a business is calculated by:
a)
sales revenue - cost of goods sold
b)
total cash in - total cash out
c)
total cash out - total cash in
d)
total cash in - cost of goods sold
41.

The term _________ describes how efficiently an asset can be converted into

cash.

a)

Liquidity

b)

Solvency

c)

Conversion rate

d)

Working capital cycle

42.

In a given cash flow forecast, the closing balance in June would become the ____________ of July.

a)

Closing balance

b)

Working capital

c)

Net cash flow

d)

Opening balance

43.
Which one of the following is an example of an outflow? 
a)
Capital 
b)
Bank Loan
c)
Wages 
d)
Government Grant
44.
Which of the following is true about cash flow?
a)
It is the same as profit
b)
It is different from profit
c)
It is the same as revenue
45.
What is net cash flow?
a)
The difference between revenue and cost
b)
The difference between money in and money out
c)
The difference between assets and liabilities
46.

Which of the following reduces a businesses cash flow?

a)

Asking debtors for payment

b)

Repaying an overdraft

c)

Securing better trade credit terms from suppliers

47.
How can cash outflows be improved?
a)
Buy extra equipment
b)
Lease out equipment
c)
Use a factoring service
48.

What is the formula used for a cash flow forecast?

a)

[ Receipts - Payments = Net Cash Flow ] + Opening Balance = Closing Balance.

b)

[ Receipts - Payments = Net Cash Flow ] - Opening Balance = Closing Balance.

49.

Cash is not the same as profit. Why?

a)

Cash may come from loans and investors, profit only comes from sales revenue

b)

They are the same

c)

Cash is used to pay the bills within a business

d)

Cash flow stops a business from going bankrupt

50.
Which of the following is an example of a cash out-flow for a business?
a)
payments to creditors
b)
sale of goods
c)
payment from debtors
d)
receiving a loan from the bank
51.
Complete this statement with the best option: ‘The longer the cash-flow cycle… .’
a)
the less cash the business will need
b)
the lower will be the firm’s working capital needs
c)
the less chance there is for the business to run out of cash
d)
the more working capital and cash the business will need
52.
INAC’s gross profit for July was:
a)
$2,000
b)
$1,500
c)
$500
d)
$2,500
53.
INAC’s net cash flow for July was:
a)
$2,000
b)
$1,500
c)
$500
d)
$2,500
54.
Which of the following is the value of x? ($000)
a)
$2
b)
$4
c)
$6
d)
($2)
55.
Which of the following is the value of y? ($000)
a)
$4
b)
$6
c)
$9
d)
($9)
56.
Which of the following is the value of z? ($000)
a)
$2
b)
$5
c)
$(15)
d)
$(5)
57.
Which of the following best describes finance?
a)
Funds for a business
b)
Customers for a business
c)
Profits for a business
58.
What is the most likely source of finance for a small firm?
a)
A debenture (loan)
b)
Issuing shares
c)
A bank loan
59.
What is the most likely source of finance for buying premises?
a)
Mortgage
b)
Factoring (sell their invoices to a factor such as a bank)
c)
A bank loan
60.
What do lenders ask for as a guarantee that a loan will be repaid?
a)
Interest
b)
Collateral
c)
References
61.
What is someone who lends money called?
a)
Borrower
b)
Debenture
c)
Creditor
62.
Which of the following is a start up cost?
a)
Staff Wages
b)
Electricity bill payment
c)
Purchasing a van
d)
Break Even
63.
What is a fixed cost?
a)
A cost that changes depending upon output
b)
A cost that is paid to your friend
c)
A cost that stays the same regardless of output
d)
Money received through the selling of products
64.

What is a variable cost?

a)

Salaries

b)

A cost that changes depending upon output

c)

Rent

d)

Purchase of a computer

65.
Which of the following are not a source of revenue
a)
Interest payments from savings
b)
Purchasing of stock
c)
Selling of products
d)
Credit sales
66.
If the opening balance is £5,000, total receipts are £4,000 and the closing balance is £3,000 then total payments are:
a)
£4,000
b)
£5,000
c)
£6,000

Similar Resources on Wayground

Principles of Business Fall Midterm Review 25-26

70 questions

Principles of Business Fall Midterm Review 25-26

quiz

Worksheet

•

9th - 12th Grade

12ACredit, Cars and Loans

61 questions

12ACredit, Cars and Loans

quiz

Worksheet

•

12th Grade

Web Design final

71 questions

Web Design final

quiz

Worksheet

•

9th - 12th Grade

Introduction to Office pt. 1

67 questions

Introduction to Office pt. 1

quiz

Worksheet

•

10th - 12th Grade

Unit 5 Quiz

61 questions

Unit 5 Quiz

quiz

Worksheet

•

9th - 12th Grade

Sharks Final Assessment 6 8 2023

70 questions

Sharks Final Assessment 6 8 2023

quiz

Worksheet

•

9th - 12th Grade

Intro to Business Final Exam Review

63 questions

Intro to Business Final Exam Review

quiz

Worksheet

•

9th Grade - University