Business BTEC Unit 3 - Aim E
Comprehensive Questions
(Frequently Tested) with
Verified Answers Graded A+
What is cash flow forecast? - Answer: It is a planning tool that helps business to avoid the risk of
serious money problems
Pros of cash flow forecast - Answer: - inflows and outflows are monitored (spending and costs
are managed)
- possible problems are easily spotted
- expensive items can be bought at the right time
- the business can plan to expand or reduce activities
Cons of cash flow forecast - Answer: - late inflows may not be identified
- suppliers may refuse to trade if the business hasn't got a good reputation for repayments
- cannot plan for unexpected events (e.g. increased costs)
- forecast can be inaccurate as these are estimates (may or may not come true)
Inflow - Answer: Money coming into a business
Outflow - Answer: Money going out of a business
, Total inflow - Answer: Total money received over a period of time (e.g. income)
Total outflow - Answer: Total payment over a period of time (e.g. expenditure)
Types of inflow (receipts) - Answer: - cash sales
- credit sales
- loans
- capital introduced
- sales of assets
- bank interest received
Types of outflow (payments) - Answer: - cash purchases
- credit purchases
- rent
- rates
- salaries
- wages
- utility bills
- purchase of assets
- VAT (value added tax)
- bank interest paid
Calculate net cash flow - Answer: inflow - outflow
Comprehensive Questions
(Frequently Tested) with
Verified Answers Graded A+
What is cash flow forecast? - Answer: It is a planning tool that helps business to avoid the risk of
serious money problems
Pros of cash flow forecast - Answer: - inflows and outflows are monitored (spending and costs
are managed)
- possible problems are easily spotted
- expensive items can be bought at the right time
- the business can plan to expand or reduce activities
Cons of cash flow forecast - Answer: - late inflows may not be identified
- suppliers may refuse to trade if the business hasn't got a good reputation for repayments
- cannot plan for unexpected events (e.g. increased costs)
- forecast can be inaccurate as these are estimates (may or may not come true)
Inflow - Answer: Money coming into a business
Outflow - Answer: Money going out of a business
, Total inflow - Answer: Total money received over a period of time (e.g. income)
Total outflow - Answer: Total payment over a period of time (e.g. expenditure)
Types of inflow (receipts) - Answer: - cash sales
- credit sales
- loans
- capital introduced
- sales of assets
- bank interest received
Types of outflow (payments) - Answer: - cash purchases
- credit purchases
- rent
- rates
- salaries
- wages
- utility bills
- purchase of assets
- VAT (value added tax)
- bank interest paid
Calculate net cash flow - Answer: inflow - outflow
