(E1) Cash Flow Forecasts Flashcards
1
Q
Cash Inflows/Receipts
A
- Cash sales
- Credit sales
- Loans
- Capital introduced
- Sale of assets
- Bank interest received.
2
Q
What is capital introduced?
A
Funds invested in the business by the owner or shareholders
3
Q
What is bank interest received?
A
Money from the interest gained from a bank account
4
Q
Cash Outflows/Payments
A
- Cash purchases
- Credit purchases
- Rent
- Rates
- Salaries
- Wages
- Utilities
- Purchase of assets
- Value Added Tax (VAT)
- Bank interest paid
5
Q
What is bank interest paid?
A
The money spent on paying back the interest of borrowed money
6
Q
What is Value Added Tax (VAT)?
A
A tax on goods and services sold
7
Q
What are the benefits and limits of cash flow forecasts?
A
Can help a business predict if they have cash flow problems but isn’t always accurate
8
Q
Ways to improve cash flow
A
- Reduce unnecessary expenses
- Sell debts
- Get debt paid back from debtors quicker
- Set targets
