Test Bank for Cash Flow & Working Capital- Exam Questions Solved Correctly Latest 2025
Cash - Answers current asset and represents the actual money a business has. Can exist in the form of
cash in hand or at bank.
Profit - Answers is sales revenue less expenses.
Assets - Answers items with a monetary value that belong to a business. Can be fixed (machinery, tools,
buildings) or current (cash,stock,debtors).
Cash Flow - Answers movement of money into and out of an organisation. Cash inflows mainly come
from sales revenue. Cash outflows are for items of expenditure.
Cash flow forecast - Answers financial document that shows the predicted future cash inflows and cash
outflows for a business during a trading period.
Cash flow statement - Answers financial document that records the actual cash inflows and cash
outflows of a business.
Working capital - Answers the amt of finance available to a business for its daily operations. It is
calculated by current assets minus current liabilities
Insolvency - Answers is a situation where a firm's working capital is insufficient to meet its current
liabilities. It can lead to the collapse of the business as creditors will take legal action to recover their
money.
Liquidation - Answers the need to sell off assets to repay as uch of the money owed to creditors
Debtors - Answers people or organisations that owe money to the business as they have purchased
goods on credit. The value of debtors is a current asset because money is owed to the business
Creditors - Answers suppliers need to be repaid for items that have been purchased on trade credit
Stock - Answers unsold supplies of raw materials, semi-finished goods (work-in-progress) and finished
goods. Finished goods are relatively liquid in comparison to raw materials
Overdraft - Answers short-term source of finance needs to be repaid quickly as interest rates tend to be
very high.
working capital cycle - Answers interval between cash outflows for costs of production and cash inflows
from customers who receive their finished goods and services
Cash inflow - Answers usually comes from sales revenue, debtor, loans
Cash outflow - Answers expenses or cash the leaves a business. eg rent, wages, purchase of inventory,
tax, advertising, interest repayments
Net cash flow - Answers difference between cash inflows and cash outflows. Can be positive or negative
Cash - Answers current asset and represents the actual money a business has. Can exist in the form of
cash in hand or at bank.
Profit - Answers is sales revenue less expenses.
Assets - Answers items with a monetary value that belong to a business. Can be fixed (machinery, tools,
buildings) or current (cash,stock,debtors).
Cash Flow - Answers movement of money into and out of an organisation. Cash inflows mainly come
from sales revenue. Cash outflows are for items of expenditure.
Cash flow forecast - Answers financial document that shows the predicted future cash inflows and cash
outflows for a business during a trading period.
Cash flow statement - Answers financial document that records the actual cash inflows and cash
outflows of a business.
Working capital - Answers the amt of finance available to a business for its daily operations. It is
calculated by current assets minus current liabilities
Insolvency - Answers is a situation where a firm's working capital is insufficient to meet its current
liabilities. It can lead to the collapse of the business as creditors will take legal action to recover their
money.
Liquidation - Answers the need to sell off assets to repay as uch of the money owed to creditors
Debtors - Answers people or organisations that owe money to the business as they have purchased
goods on credit. The value of debtors is a current asset because money is owed to the business
Creditors - Answers suppliers need to be repaid for items that have been purchased on trade credit
Stock - Answers unsold supplies of raw materials, semi-finished goods (work-in-progress) and finished
goods. Finished goods are relatively liquid in comparison to raw materials
Overdraft - Answers short-term source of finance needs to be repaid quickly as interest rates tend to be
very high.
working capital cycle - Answers interval between cash outflows for costs of production and cash inflows
from customers who receive their finished goods and services
Cash inflow - Answers usually comes from sales revenue, debtor, loans
Cash outflow - Answers expenses or cash the leaves a business. eg rent, wages, purchase of inventory,
tax, advertising, interest repayments
Net cash flow - Answers difference between cash inflows and cash outflows. Can be positive or negative
