Cashflow Exam Style Questions

My teacher gave me a copy of this when i did my GCSE's. it may be useful if you, you could try it and give it to your teacher to mark. Good Luck.

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  • Created on: 01-10-12 16:34
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Cash Flow Forecast Exam Questions
1. AZ Ltd
(a) AZ Ltd is a new manufacturing business. It has prepared a cash flow forecast that includes items such as its
new premises, and the equipment and materials required to make their products. Use the table below to indicate
whether these items are a startup cost or a running cost. Tick as appropriate. [3]
Startup cost Running cost
Premises costing £100,000
Equipment costing £55,000
Materials costing £2,000 per month
(b) Complete the unshaded areas of the cash flow forecast for this business.
. [6]
Cash flow forecast
for AZ Ltd in 2006
May Jun July Aug Sept Oct
RECEIPTS (£)
Sales 10,000 10,000 10,000 10,000 10,000 10,000
Capital introduced 100,000 0 0 0 0 0
Loan 50,000 0 0 0 0 0
Grant 10,000 0 0 0 0 0
Other income 1,000 1,000 1,000 1,000 1,000 1,000
Total receipts 11,000 11,000 11,000 11,000 11,000
PAYMENTS (£)
Premises 100,000 0 0 0 0 0
Equipment 45,000 0 0 10,000 0 0
Materials 2,000 2,000 2,000 2,000 2,000 2,000
Marketing 1,000 0 0 0 0 0
Other running costs 6,000 5,000 4,000 4,000 4,000 4,000
Total payments 7,000 6,000 16,000 6,000 6,000
ReceiptsPayments 4,000 5,000 5,000 5,000 5,000
Opening Balance 0 17,000 21,000 26,000 21,000
Closing Balance 17,000 21,000 26,000 21,000
(c) What would be the closing balance in May if AZ Ltd are not awarded a grant? Would the business still be
able to proceed without the grant, assuming nothing else changes?
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(d) Are the directors likely to be pleased with this cash flow forecast? Give two reasons for your answer?

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The finance director used a manual system to prepare the cash flow forecast. Discuss two advantages and
two disadvantages of using a computer to prepare financial documents such as cash flow forecasts.
Advantage.....................................................................................................................
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Advantage.....................................................................................................................
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Disadvantage..................................................................................................................
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Disadvantage..................................................................................................................
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[Total: 22]
2. Engelmann's
Max Engelmann is concerned about the future of his grocery store, Engelmann's. He is due to see the bank manager
next week and is wondering what kind of information he will need to provide.…read more

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ReceiptsPayments 300 300 100 250 500
Opening Balance 500
Closing Balance
(b) If the bank manager is willing to lend Engelmann's some money over the next six months, state the amount
that Max may need to borrow.
...................................................................................................[1]
(c) Should Max be concerned for the future of the store? Use a range of information from the cash flow forecast to
give reasons for your answer.
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(d) Max has been offered insurance at £40 per month.…read more

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