cash flow

Question 1

what is a cash flow

Answer 1

refers to the money coming in and paid out of a business in a monthly period

Question 2

what is a receipt

Answer 2

money coming into a business- cash sales, loans

Question 3

what is a payment

Answer 3

money going out of the business- buying materials, paying wages

Question 4

why must a business have a good cash flow

Answer 4

must ensuire their receipts are higher than payments to make sure they still have money left over

Question 5

ways to improve cash flow

Answer 5

sell an asset, find cheaper supplier, charge higher selling price

Question 6

what is a cash budget

Answer 6

used to forecast the money coming into and out the business, it is an estimate for each month

Question 7

what is an opening balance

Answer 7

money the business has at the start of the month

Question 8

what is a closing balance

Answer 8

opening balance + receipts- payment

Question 9

what would you do if wage costs are higher

Answer 9

cut overtime as this will save on extra costs

Question 10

what are benifits of cash budgets

Answer 10

can identify times where there may be a shortage of cash, months that expenses are highe are highlighted so businesses make sure there is enough cash to cover

Question 11

what is surplus and deficit

Answer 11

surplus- positive
deficit- negative
when talking about a cash budget