1.3.3 Cash and Cash-flow Flashcards
1
Q
Why is cash important to a business?
A
- pay suppliers
- pay overheads e.g. raw materials
- pay employees
- promote the business
2
Q
What are some examples of cash outflows?
A
- machinery and equipment
- wages
- raw materials
- heating, lighting and insurance
3
Q
How do you calculate cash flow?
A
cash flow = net cash flow + opening balance
4
Q
What are some examples of cash inflows?
A
- recipes
- selling assets
5
Q
How do you work out net cash flow?
A
net cash flow = receipts - payments
6
Q
What is the opening balance?
A
the amount of money in a business at the start of a month (the previous month’s closing balance).
7
Q
What is the closing balance?
A
the amount of money in a business at the end of a month
8
Q
How do you work out closing balance?
A
closing balance = net cash flow + opening balance
9
Q
What impacts cash flow?
A
- change in stock levels
- business expansion or contraction
- change in sales revenue/change in demand
- change in costs
10
Q
What is cash?
A
the given amount of money that is available for a business to use to pay its debts.
