1) Which of the following is a reason why cash flow is important? a) To make sure there is enough money to pay bills b) To ensure good quality products c) It increases production 2) Name one purpose of a cash flow forecast a) Enables a firm to plan when they can buy new equipment and need a loan b) It outlines the aims of the business c) It is a factor which affects location 3) Name a consequence for a firm if the cash flow forecast is incorrect a) Shortage of working capital b) Demotivated staff c) The company will make more profit 4) A businesses closing balance is £-2763, what does this mean? a) Receipts are higher than payments b) Receipts are lower than payments c) The closing balance is positive d) The business has poor working capital 5) A businesses closing balance is £1970, what does this mean? a) Receipts are higher than payments b) Payments are greater than receipts c) The closing balance is negative d) The business has poor working capital e) The business has good working capital 6) In which situation could assets of the business have to be sold? a) Negative closing balance b) Positive closing balance c) Payments are greater than receipts d) Receipts are greater than payments 7) Stella's closing balance for the next 6 months is positive, is she more likely to get a loan? a) Yes b) No 8) What source of finance is used if there is a shortage of cash? a) Overdraft b) Government Grant c) Share Issue

Cash Flow - Exam Questions

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