E1 - Cash Outflow Forecasts Flashcards
Explain cash purchases as an outflow.
They’re the items that the business purchases and pays for at the time of purchase.
Explain credit purchases as an outflow.
It’s the items that have been bought by the business but then paid for at a later date.
Explain rent as an outflow.
It’s a regular payment made to a landlord, usually in exchange for the use of a premises.
Explain rates as an outflow.
That’s the tax on property used for business purposes.
Explain salaries as an outflow.
It’s a fixed regular payment to an employee, typically paid on a monthly basis and often expressed as an annual sum.
Explain wages as an outflow.
They are payments from the employer to the employees based on hours worked.
Explain utilities as an outflow.
That’s an umbrella term that includes electricity, gas and water usage and costs, as well as bills for essential services.
Explain purchase of assets as an outflow.
It’s the purchase of non current assets that a business is likely to keep for more than a year (such as vehicles, machinery, land and property).
Explain Value Added Tax (VAT) as an outflow.
Businesses that are VAT registered must pay VAT to HMRC.
Explain bank interest paid as an outflow.
It’s the interest that is incurred due to borrowing money.
