Cash inflows and outflows.

Question 1

Cash inflows

Answer 1

Money coming into the business

Question 2

Cash Sales

Answer 2

Goods and services paid for at the time of sale using cash or debit card

Question 3

Credit Sales

Answer 3

Goods and services paid for following purchase e.g. credit card

Question 4

Loans

Answer 4

Money borrowed by the business from an external source.

Question 5

Capital Introduced

Answer 5

Funds invested in the business by the owner or shareholders.

Question 6

Sale of Assets

Answer 6

Money received from selling an asset, e.g. machinery

Question 7

Bank Interest Received

Answer 7

The business may store money in a savings account on which the bank will pay interest.

Question 8

Cash Outflows

Answer 8

Money going out of the business.

Question 9

The 10 Cash Outflows

Answer 9

Cash purchases, credit purchases, rent, rates, salaries, wages, utilities, purchase of assets, VAT, Bank interes paid.

Question 10

Cash purchases and Credit purchases

Answer 10

Anything a business buys is an outflow wheter it is for use by the business or for resale, e.g. raw materials, stationary.

Question 11

Rent, rates, salaries, wages and utilites.

Answer 11

These are all refular outflows. the business must have cash to cover these.

Question 12

Purchase of assets

Answer 12

These are small and large expenditures on items, from computer printers and telephones to vehicles and expensive machinery and buildings.

Question 13

VAT

Answer 13

VAT is charged on most goods and services. A business must be registered for VAT if its sales go over the VAT threshold (£85000).The business adds VAT on to the cost of its goods and services.