3.7 - Cash flow

Question 1

debtors are unable to pay their outstanding invoices, which reduces the cash inflow of the vendor

Answer 1

bad debts

Question 2

current asset and represents actual money a business has

Answer 2

cash

Question 3

transfer/movement of money into/out of an organization

Answer 3

cash flow

Question 4

financial tool used to show the expected movement of cash in/out of a business within a given period of time

Answer 4

cash flow forecast

Question 5

financial document that records actual cash inflow/outflows of a business in a specific trading period (usually 12 months)

Answer 5

cash flow statement

Question 6

cash that comes into a business, usually from sales revenue

Answer 6

cash inflow

Question 7

cash that leaves a business during a given time period, when invoices/bills have to be paid

Answer 7

cash outflows

Question 8

amount of cash left in a business at the end of each trading period

Answer 8

closing balance

Question 9

closing balance formula

Answer 9

closing balance = opening balance + net cash flow

Question 10

process of monitoring/managing debtors, like ensuring only suitable customers are permitted trade credit and that customers dont exceed the agreed credit period

Answer 10

credit control

Question 11

different between a firm’s cash inflow and cash outflow for a given time period, usually per month

Answer 11

net cash flow

Question 12

value of cash in a business at the start of a trading period. equal to the closing balance of the previous month

Answer 12

opening balance

Question 13

when a business attempts to expand too quickly without the funds to do so, and harms its cash flow

Answer 13

overtrading

Question 14

positive difference between a firm’s total sales revenue and total costs of production

Answer 14

gross profit

Question 15

time between cash outflows for production costs and cash inflows from customers

Answer 15

working capital cycle