Finance — cash flow
AQA GCSE Business Studies revision on Finance — cash flow. Aligned to the AQA GCSE Business 8132 specification. This bank has 10 practice questions on this topic.
Sample questions (3 of 10)
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Question 1
Which of the following is defined as the movement of money into and out of a business?
- A) Profit
- B) Cash flow
- C) Revenue
- D) Capital
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Answer: Cash flow
Cash flow tracks the actual movement of currency through a business, distinct from profit. It focuses on the timing of receipts from sales and payments for expenses, which is crucial for maintaining daily operations.
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Question 2
If a business has a cash inflow of 5000 pounds and a cash outflow of 6000 pounds in a month, what is the net cash flow?
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Answer: -1000
To find the net cash flow, you subtract the total cash outflows from the total cash inflows. In this case, 5000 minus 6000 equals -1000, indicating a negative cash flow for that period.
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Question 3
Which of the following is a common reason for a business to experience negative cash flow?
- A) High profit margins
- B) Offering customers long credit periods
- C) Decreased rent costs
- D) Increasing cash sales
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Answer: Offering customers long credit periods
While a business may make a sale, they do not receive the cash until the customer pays. Allowing long credit periods means the business must cover its own costs before the customer settles their invoice, often leading to temporary cash shortages.
Want to test yourself on the remaining cards for this topic?
7 more questions on Finance — cash flow — plus mistakes tracking and spaced repetition across the whole Business Studies spec.