2.1.4. Cash Flow

Question 1

Cash flow forecast

Answer 1

Prediction of the cash coming in and going out of a business in the form a table

Question 2

Insolvent

Answer 2

When a business can no longer pay its debts or staff wages because they have no cash

Question 3

Inflows

Answer 3

Money coming into a business ( receipts )

Question 4

Net Cash Flow Equation

Answer 4

Total inflow - total outflow

Question 5

Opening balance

Answer 5

Same as the months before closing balance

Question 6

Closing balance

Answer 6

Net cash flow + opening balance

Question 7

Uses of cash flow forecast

Answer 7

• to help control + monitor cash in and out of a business
• shows business owner where likely cash surplus and shortages are so they can arrange suitable finance