Learning objective
Complete and interpret sections of a cash flow forecast, including cash inflows, cash outflows, net cash flow, opening balance and closing balance.
Read the explanation, check the common trap, then practise with flashcards and questions.
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Topic
Cash flow
Subtopic
Cash flow forecasting and interpretation
Study support
Understand this objective
Quick explanation
Complete and interpret sections of a cash flow forecast, including cash inflows, cash outflows, net cash flow, opening balance and closing balance
- This point belongs to Cash flow, especially Cash flow forecasting and interpretation.
- You need to be able to complete and interpret sections of a cash flow forecast, including cash inflows, cash outflows, net cash flow, opening balance and closing balance.
- The key ideas to know are cash inflow, closing balance, and opening balance.
- Use the linked flashcards and practice questions to check recall, then practise applying the idea in an exam-style answer.
Key concepts
Why it matters
This objective helps connect Cash flow forecasting and interpretation to exam-style questions, flashcards, and revision notes for Cash flow.
Quick student answer
A small manufacturer has an opening balance of £4,500. During the month it records cash inflows of £10,200 and cash outflows of £8,700. What is the closing balance for the month?
Direct answer
£6,000
How it works
First calculate net cash flow: £10,200 – £8,700 = £1,500. Then add this to the opening balance: £4,500 + £1,500 = £6,000.
Key terms
- Net cash flow: The difference between total cash inflows and total cash outflows over a period, showing the net change in cash.
Common trap
Confusing opening balance with cash inflow: The opening balance is the cash available at the start of the period; it is not counted as an inflow.
Related questions
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Revision notestopic notes
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Open revision notesRelated learning objectives
- Explain consequences of cash flow problems and effects of positive cash flow.
Cash flow forecasting and interpretation
- Explain how and why cash flow forecasts are constructed.
Cash flow forecasting and interpretation
- Distinguish cash from profit.
Cash flow forecasting and interpretation
- Evaluate possible solutions to cash flow problems, including rescheduling payments, using overdrafts, reducing cash outflow, increasing cash inflow and finding new sources of finance.
Solving cash flow problems