E1 Cash flow forecasts

Question 1

what is cash flow forecast?

Answer 1

the process of estimating the size and timing of cash inflows and outflows within a business. this predicts net cash flow and opening and closing balance at set points in time, normally monthly.

Question 2

what is cash inflows?

Answer 2

the receipt of cash into a business: credit sales, loans received, sale of assets or interest received from banks.

Question 3

what is cash outflows?

Answer 3

the transfer of cash out of a business: cash or credit sales, paying expenses, purchase of assets, VAT or interest paid.

Question 4

what is trade receivables?

Answer 4

is the amount owed by customers following the sale of goods and services on credit

Question 5

what is trade payables?

Answer 5

the money a business owe its suppliers for business supplies

Question 6

reasons to use cashflow forecasts

Answer 6

planning
monitoring
control
setting targets