About Cash Flow

Following are some of the multiple choice questions on the Cash Flow with answers that will help the students in developing their knowledge.

Cash Flow MCQ

1. Which are examples of expenses?

  • Rent/Mortgage
  • Car Insurance
  • Credit Card debt
  • Savings account

2. How is it called when a Business runs out of cash?

  • Inflow
  • Insolvency
  • Insufficiency
  • Inaccuracy

3. Which one of the following ISN’T a way of cash outflow?

  • Purchasing goods & services
  • Paying wages, salaries and expenses
  • Paying creditors
  • Borrowing money from external sources

4. Which of these is NOT a goal of the cash flow forecast?

  • Start up a business
  • Run an existing business
  • Be 100% accurate
  • Keep the bank informed

5. What means "cash flow as a liquid asset"?

  • That it assess a company's profitability.
  • That is immediately available for spending on goods and services.
  • That it includes all purchases of capital assets and investments in other business ventures.
  • That it represents the cash a company generates after accounting for cash outflows to support operations and maintain its capital assets.

6. Which one of these is NOT a type of activity presented on the statement of cash flows?

  • Producing.
  • Investing.
  • Operating.
  • Financing.

7. Why is the cash flow forecast important?

  • To know if the business is holding too much cash that could be used in a more profitable way.
  • To know how much money ask the bank for.
  • To help the manger to know the available cash to pay/purchase.
  • All the above.

8. Which one is the working capital formula?

  • Working capital = cash received - cash spent.
  • Working capital = current assets - current liabilities.
  • Working capital = operating cash flow - capital expenditures.

9. You can have negative Net Worth.

  • True
  • False

10. How do you build wealth

  • Manage your asset and liabilities
  • Managing your expenses

11. Asset-Liabilities=

  • Net Worth/Wealth
  • Cash Flow
  • Income
  • Expenses

12. What is another word for Wealth?

  • Rich
  • Net Worth
  • Wealthy

13. A thing for which someone is responsible, especially a debt or financial obligation is a _____.

  • asset
  • liability
  • net worth
  • bacon

14. Which of these ISN’T a way of holding working capital?

  • Cash
  • A company car
  • Debtors
  • Inventories

15. Bills and Loans are examples of ________?

  • Assets
  • Liabilities
  • Net worth
  • Pickles

16. What is a Liability ?

  • anything you own that has value
  • debts you owe
  • something you borrow

17. Property owned by a person or company, regarded as having value is an __________

  • asset
  • liability
  • net worth
  • pizza

18. What is an Asset?

  • debts you owe
  • anything you borrow
  • anything you own that has value

19. What are the 3 types of Income?

  • Earned
  • Passive
  • Regressive
  • Portfolio

20. What is Income?

  • Money that goes
  • Money that flow
  • Money that you bring in

21. Why is the cash flow important?

  • To know the available cash you have
  • To know if the business/individual is being efficient with its cash
  • To avoid negative balances
  • All are correct

22. What is cash flow?

  • The Route of Funds
  • Money that comes and goes
  • Money that goes from business to business

23. Self Assessment: How confident do you feel about Cash flow?

  • Red
  • Amber
  • Green

24. Spirit are looking to better understand its cash flow situation, what kinds of “outflow” would Spirit likely be paying for?

25. What did the business finish this cash flow statement with?

  • A profit of ...
  • A loss of ...
  • 25,000
  • -25,000

26. What is the purpose of a cash flow forecast?

  • To calculate profit or loss
  • To find out whether a business has enough cash to pay their bills
  • To find out when customers are going to pay their invoices
  • To see if the business will break even

27. How much cash is received from the investment of a business owner, cash received from a bank loan, and the cash paid for a bank loan.

  • Operating Activities
  • Financing Activities
  • Investing Activities

28. How much cash a business generates from selling a non-current asset or how much they spend to acquire a non-current asset

  • Operating Activities
  • Financing Activities
  • Investing Activities

29. How much cash a business generates from it's core business operations - selling products or services

  • Operating Activities
  • Financing Activities
  • Investing Activities

30. Shows the total change in cash from operating, investing, and financing activities

  • Beginning Cash Balance
  • Net Cash Flows
  • Ending Cash Balance

31. The future plan of all money transactions for a specific time frame

  • cash flow statement
  • cash flow projection

32. Ideally, the net cash flow should be

  • positive
  • negative

33. Purchasing an asset would be an example of

  • cash inflow
  • cash outflow

34. Money received from a business investor would be an example of

  • cash inflow
  • cash outflow

35. The amount of cash moving into and out of a business

  • Cash Flow
  • Net Worth

36. The term _________ describes how efficiently an asset can be converted intocash.

  • Liquidity
  • Solvency
  • Conversion rate
  • Working capital cycle

37. Assume a firm sells goods costing £40,000 for £55,000. It provides the customerwith 70% trade credit (i.e. the customer pays only 30% of the price as a downpayment). The profit earned is __________, and the cash received is _________.

  • £15,000, £12,000
  • £15,000, £16,500
  • £15,000, £28,000
  • £15,000, £55,000

38. Cash inflows less than cash outflows =

  • Positive cash flow
  • Insolvency

39. Spirit started the month with an opening balance of 2,500. There total inflow was 5,000 and there total outflow was 3500. A) What was their NCF? B) What was their CB?

  • 1500
  • 2000
  • 4000
  • 6000

40. When a company spends $200 total on production. If they earn $500 in total revenue at a price of $50 per unit, then what is the company's average total cost of production for each unit?

  • $20
  • $50
  • $30
  • $10

41. When a company produces one extra unit, their total cost increases from $7,500 to $8,000. What is the marginal cost of producing that extra unit?

  • $500
  • $8,000
  • $7,500
  • $250

42. A company hires 3 workers for a day for $250 each, spends $400 on materials for the day, and pays a fixed daily rent of $100. What is the company's total cost for this day of operations?

  • $1,250
  • $750
  • $1,000
  • $1,150

43. Apple's 2016 revenue was $214.23 billion, and their net income (profit) was $45.69 billion. What was Apples total cost in 2016?

  • $168.54 billion
  • $157.24 billion
  • $172.53 billion
  • $161.51 billion

44. If a company earns $200 in total revenue when they produce 40 units, and they earn $40 in economic profit, then what is the company's average total cost per unit of production?

  • $4
  • $5
  • $10
  • $40

45. When a company increases production from 4 to 7 units, total revenue increases from $240 to $360. What is the marginal revenue (MR) of the last unit sold?

  • $30
  • $40
  • $51.50
  • $60.25

46. The total cost for a company is $50. If the total variable cost is $20, then what is the total fixed cost for the company?

  • $20
  • $30
  • $40
  • $10

47. The price of a product is $10, and the average total cost is $7. If the company produces and sells 25 units of the product, then what is their economic profit?

  • $2,500
  • $175
  • $75
  • $750

48. A firm produces 500 units at a total cost of $2,000. What is their average total cost of production?

  • $4 per unit
  • $5 per unit
  • $3 per unit
  • $2 per unit

49. If a company sells 400 units of their product at an average price of $15 per unit, what is their total revenue?

  • $6,000
  • $4,500
  • $4,000
  • $7,500

50. Which of the following ISN'T a cash flow problem?

  • Higher cash inflow than cash outflow
  • Sudden fall in sales
  • Unforeseen expenses
  • Debtors payback period is too long

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