Lesson 5.8.1

5.8.1 Cash-flow Quiz: OCR Business, Unit 5

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson 5.8.1, Cash-flow: 20 multiple choice questions for the OCR Business (H431), Unit 5: Accounting and finance, written with Revision Ninja.

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The 20 questions

  1. What term describes total money moving into a business from sales and loans?

    • Cash inflow
    • Cash outflow
    • Gross profit
    • Net profit

  2. Which document estimates future cash inflows and cash outflows for a business?

    • Statement of position
    • Cash-flow forecast
    • Cash-flow statement
    • Income statement

  3. How is working capital calculated from a statement of financial position?

    • Total assets − liabilities
    • Non-current assets − liabilities
    • Current assets + liabilities
    • Current assets − liabilities

  4. What is the cash balance at the beginning of a trading period called?

    • Retained profit
    • Net cash flow
    • Closing balance
    • Opening balance

  5. Why can a profitable firm still experience cash-flow failure?

    • High profit margins
    • Excess cash inflows
    • Low overhead costs
    • Delayed trade receivables

  6. What describes the time taken between buying inventory and receiving customer cash?

    • Trading period cycle
    • Working capital cycle
    • Operating profit cycle
    • Product life cycle

  7. Which strategy improves immediate cash flow by selling unpaid invoices to third parties?

    • Leasing capital assets
    • Debt factoring
    • Extended trade credit
    • Stock reduction

  8. What term describes a business expanding rapidly without enough working capital?

    • Under-budgeting
    • Over-leveraging
    • Overtrading
    • Overcapitalisation

  9. A firm has cash inflows of £15,000 and cash outflows of £18,000. What is net cash flow?

    • £33,000
    • -£33,000
    • £3,000
    • -£3,000

  10. An opening balance is £4,000 and net cash flow is -£1,500. What is the closing balance?

    • £1,500
    • £2,500
    • -£2,500
    • £5,500

  11. Offering customers longer trade credit terms will directly cause which short-term impact?

    • Higher net profit
    • Delayed cash inflows
    • Immediate cash inflows
    • Increased cash outflows

  12. If May's closing cash balance is £8,500, what is June's opening cash balance?

    • £17,000
    • £0
    • £8,500
    • £4,250

  13. A business has current assets of £45,000 and current liabilities of £25,000. Calculate working capital.

    • £25,000
    • -£20,000
    • £70,000
    • £20,000

  14. What is the immediate cash-flow impact of purchasing new machinery with liquid cash?

    • Increased cash inflow
    • Higher working capital
    • Increased cash outflow
    • Zero cash impact

  15. How can a firm delay short-term cash outflows without reducing overall expenditure?

    • Early supplier payment
    • Extended trade credit
    • Increased stock holding
    • Shortened customer credit

  16. Why might a start-up lease equipment instead of purchasing it outright?

    • Higher net profit
    • Increased asset ownership
    • Zero operational costs
    • Smaller upfront outflow

  17. Which factor is a major limitation when relying on a cash-flow forecast?

    • Historical accuracy
    • Guaranteed bank loans
    • Unforeseen external shocks
    • Inflexible budgeting processes

  18. Which feature distinguishes a cash-flow statement from a cash-flow forecast?

    • Excluded cash outflows
    • Estimated sales figures
    • Projected future inflows
    • Historical financial data

  19. What is the main cash-flow risk of holding unnecessarily high inventory levels?

    • Faster cash inflow
    • Increased net profit
    • Reduced holding costs
    • Tied-up cash

  20. Why does depreciation feature in income statements but never in cash-flow forecasts?

    • Capital inflow
    • Current liability
    • Non-cash expense
    • Variable cost

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