1.3.3 Cash and Cash Flow

Question 1

What are the 2 types of cash a business uses

Answer 1

-Inflows and Outflows

Question 2

Explain why Cash is important To A business

Answer 2

• To pay Suppliers,Overheads and Employees
• To prevent Business Failure

Question 3

What’s the difference between Profit and cash

Answer 3

• Cash flow is the money that flows in and out of your business throughout a given period
• profit is whatever remains from your revenue after costs are deducted

Question 4

how do you calculate net cash flow

Answer 4

Inflows - outflows

Question 5

how do you calculate Opening balnce

Answer 5

its the closing balance from the previous month

Question 6

Give me some example of cash inflows

Answer 6

• Revenue from your Sales
• The income you have Invested
• Assets Sales (When a Business sells machinery)

Question 7

Give me some example of cash outflows

Answer 7

-Paying Suppliers,employees,Manger’s,Shareholders
-Paying Corporation Tax
- Using that cash on Prompting your good or service

Question 8

Explain How Cash Important for A Business (6 Marker)

Answer 8

Cash is important to pay suppliers on time (P) This will create a good relationship (S) As a result they are more likely to give the business a good price for their supplies in the future (S) This will result in lower variable costs for the business (S)

Question 9

Write a Definition Of Insolvency?

Answer 9

• Insolvency Is Where A Business Can Runs Out Of Money