Business Studies Collins Revision Guide. - StudyGuide.PK

Check yourself answers11 CASH FLOW FORECASTS (PAGE 44)1 Cash inflow Flow of money out of the business (1)SCORECash outflow Inflows are greater than outflows (1)Cash surplus Inflows are smaller than outflows (1)Cash deficit Flow of money into the business (1)It is important that you learn and then use the right terms inyour Business Studies examination.2 A cash flow forecast is a prediction (1) of the money cominginto (1) and going out of the business. (1) Note that it is aprediction not an actual situation.3 Predicting the cash flow helps a business as it can help tospot potential problems. (1) It can then arrange a loan tocover any deficits. (1) A bank manager would expect to see acash flow forecast with the business plan. (1)4Jan Feb Mar AprBank balance b/f 2000 6000 4000 –1000Cash receipts 12 000 10 000 8000 8000Total cash in 14 000 16 000 12 000 7000Payments/cash out 8000 12 000 13 000 8000Bank balance c/f 6000 4000 –1000 –1000(7)5 This cash flow forecast shows that the business is predictingthat it will have a surplus in January and February. (1)However, there is a big drop in March when there is a bigdifference between cash receipts and cash out. (1) This leadsto a deficit in March and April. (1)112TOTAL