Chapter 20~Planning The Business

Question 1

Cash flow statement/forecast ?

Answer 1

A plan showing all the expected cash receipts and cash payments in a firm over a period of time

Question 2

1 reason for having a business plan?

Answer 2

• firm knows where it is going and what it hopes to achieve.

Question 3

5 main areas of a business plan?

Answer 3

1) the business
2) key personnel
3)product/service and the marketplace
•details of main competitors
4)fixed assets of the business
• details of premises
5)finance
• amount of additional finance required and its purpose
• how the finance is to be repaid(cash flow statement should be provided)

Question 4

2 reasons for preparing a cash flow statement?

Answer 4

• it shows a business if they will be able to pay all their bills during a particular period
• it shows a business the months when they might find themselves short of cash

Question 5

2 income sources in a cash flow statement

Answer 5

• sales

- government grants

Question 6

2 difference between analysed cash book and cash flow statement?

Answer 6

1) - the analysed cash book records actual cash receipts and payments
- cash flow forecast records planned cash receipts and payments
2) - the analysed cash book is prepared for one month at a time
- cash flow statement is prepared for a number of months