1.3.3 - Cash and Cash Flow

Question 1

Credit:

Answer 1

The amount of money that a financial institution or supplier will allow a business to use, which it must pay back in the future at an agreed time

Question 2

Overheads:

Answer 2

Fixed costs that come from running and office. Shop or factory, which are not affected by the number of specific products or services that are sold

Question 3

Insolvent:

Answer 3

Insolvent: A business that is unable to pay its debts and/ or owes more money than it is owed

Question 4

Consumables:

Answer 4

Items that get ‘used up’, such as pens, paper, staples and other items that a business has to replace regularly

Question 5

Equation Net cash flow

Answer 5

Net cash flow = Cash inflow - Cashg outflow

Question 6

Cash flow forecasting

Answer 6

Refers to the prediction fo cash coming in and moving out of a business.

Question 7

Equation Closing balance

Answer 7

Opening balance + net cash flow

Question 8

Equation Opening Balance

Answer 8

Opening balance = Closing balance in preceeding month.

Question 9

Cash inflow

Answer 9

• Refers to money coming into the business

- Eg Government grants, or sales.

Question 10

Cash outflow

Answer 10

• Refers to the outgoings of the business,

- e.g. Payment of wages, rawmaterals and utility bills.

Question 11

Solvent

Answer 11

A business is solvent when it has ufficient cash oto repay its bills.

Question 12

Net cash flow

Answer 12

is the money available for the daily running of a business.