Lesson 6.2.5

6.2.5 Cash Flow Management Quiz: NCFE Business & Enterprise, Unit 6

20 questions · by Revision Ninja

In partnership with Revision Ninja

This free Cash Flow Management quiz has 20 multiple choice questions for the NCFE Level 1/2 Technical Award in Business and Enterprise (NCFE Business & Enterprise), Unit 6: Finance. It covers lesson 6.2.5, Cash Flow Management, one of the ready-made revision sets written with Revision Ninja and organised by unit on Qwiz Rush.

Use it as a starter, a plenary or an end-of-unit check: host it live on the board and students join with a game code on their own devices — no student accounts and nothing to install — or set it for independent revision with Free Play, where each student works through the questions alone.

Every question runs on a 20-second countdown and the fastest correct answers score the most. All the questions and their choices are listed below so you can see what the quiz covers; the answers are revealed in the game. Want to change something? Make your own copy and edit it in your library.

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The 20 questions

  1. A business is profitable but has run out of cash. What is the most likely immediate consequence?

    • It cannot pay wages or suppliers on time
    • Its sales revenue must have fallen
    • It is making a loss on each sale it makes
    • It owes more than its assets are worth

  2. What is the main purpose of preparing a cash flow forecast?

    • To show when the bank balance will run out
    • To set the selling price of each product
    • To work out the profit made in the year
    • To value the assets the business owns

  3. A shop's bank balance is falling. Which action would improve its cash flow the fastest?

    • Order extra stock to boost future sales
    • Sell off slow-moving stock at a discount
    • Buy a second delivery van outright
    • Pay suppliers earlier than agreed

  4. In May a business receives £18,000 and pays out £21,500. What is its net cash flow for May?

    • Negative £39,500
    • Negative £3,500
    • Positive £18,000
    • Positive £3,500

  5. A forecast shows a £5,000 shortfall in three months' time. What should the owner do now?

    • Order extra stock ready for the busy month
    • Raise the selling price of every product
    • Arrange an overdraft with the bank now
    • Buy new equipment while cash is still there

  6. Which method is most likely to speed up the cash coming into a business?

    • Offer a discount for paying in 7 days
    • Give customers 90 days of credit
    • Delay paying the business's own suppliers
    • Take out a longer-term bank loan

  7. Which of these items appears as a cash outflow in a cash flow forecast?

    • A bank loan paid into the account
    • Money invested by the owner
    • Rent paid on the business premises
    • Cash received from selling goods

  8. A business starts March with £2,000 in the bank, receives £9,000 and pays out £7,500. What is its closing balance?

    • £3,500
    • £11,000
    • £18,500
    • £1,500

  9. Why should an owner treat a cash flow forecast with some caution?

    • It records profit rather than cash movements
    • It is based on last year's actual figures
    • It is a legal document sent to HMRC
    • The figures are estimates that may be wrong

  10. A business wants 60 days to pay for its stock instead of the usual 30. What is the main risk of this?

    • The business will pay more corporation tax
    • It must pay its suppliers a month sooner
    • Suppliers may refuse to deliver again
    • Its customers will demand lower prices

  11. Why does a business need to hold cash from day to day?

    • To record the profit it has earned over the past twelve months.
    • To set a price high enough to cover its variable costs per unit.
    • To meet everyday bills such as wages, rent and supplier invoices.
    • To show the value of the assets it owns on its balance sheet.

  12. How does a cash flow forecast help the owner of a small shop?

    • It sets the amount of stock the firm should order from its suppliers.
    • It shows the months when payments out are greater than money coming in.
    • It works out the level of sales the shop needs in order to break even.
    • It records the profit the firm has earned in each of the past months.

  13. A cafe is low on cash this month. Which action would ease the pressure quickly?

    • Ask suppliers for longer credit terms so payments leave the account later.
    • Buy the new coffee machine outright instead of leasing it month by month.
    • Order stock in bulk now to gain a lower price on each unit bought.
    • Give customers a longer credit period to encourage them to order more.

  14. In a cash flow forecast, which item is counted as a cash inflow?

    • Cash paid to a supplier for the raw materials used to make the goods.
    • Rent paid to the landlord for the use of the firm's premises.
    • Wages paid to the shop staff who worked during that same month.
    • Money received from customers for goods sold during the month.

  15. Customers keep paying their bills weeks late. Which step tackles that directly?

    • Pay suppliers early each month to build a good trading relationship.
    • Offer customers a discount for settling their invoice within ten days.
    • Give new customers 90 days of trade credit so that they place larger, repeat orders.
    • Buy stock in bulk each quarter to bring down the cost of each unit.

  16. What is the difference between profit and cash flow?

    • Profit is worked out monthly; cash flow is worked out at the year end.
    • Profit is the cash in the till; cash flow is the money held in the bank.
    • Profit counts the cash sales; cash flow counts the sales made on credit.
    • Profit is revenue minus costs; cash flow is money moving in and out.

  17. Holding a healthy amount of cash gives a business which advantage?

    • It cuts the corporation tax bill, because tax is charged on the cash a firm holds.
    • It raises the value of the stock the firm is holding in its warehouse.
    • It raises the gross profit margin the firm earns on each item it sells.
    • It can settle bills on time and cope with sudden costs such as repairs.

  18. Which source of finance best suits a short-term gap in a firm's cash?

    • A share issue, which raises permanent capital from outside investors.
    • A mortgage, which spreads the cost of the premises over many years.
    • Retained profit, a free internal source built from earnings kept back over past years.
    • An overdraft, which lets the firm borrow from the bank for a few weeks.

  19. Which of these is an internal cause of a firm's cash flow problems?

    • Poor stock control, leaving cash tied up in goods that do not sell.
    • A fall in consumer spending during a downturn in the wider economy.
    • A new rival opening nearby and cutting prices on the same high street.
    • A rise in interest rates, which pushes up the cost of the firm's loan.

  20. A cash flow forecast shows a negative closing balance for March. What does that mean?

    • The firm expects to owe money to the bank at the end of that month.
    • The firm expects its revenue to fall below the level of the year before.
    • The firm expects to hold too much unsold stock in its warehouse then.
    • The firm expects to make a loss on the goods that it sells that month.