ocr level 3 cambridge technicals in business unit 4: business accounting cash flow forecast
TRANSCRIPT
OCR Level 3Cambridge Technicals
in Business
Unit 4: Business Accounting
Cash Flow Forecast
Cash Flow ForecastCash Flow ForecastThe cash flow records money flowing in and out
of the business.
Income is recorded on the date the money
was received
Expenditure is recorded on the date the
payment was made
DefinitionsDefinitionsIncome - money that has come into the
business and includes:
Initial capital (money) to start the business
Money received from sale of products or services offered
Money received from loans
Money received from the sale of fixed assets
DefinitionsDefinitionsExpenditure – any money that is spent during the
normal activities of the business. It can include:
Payment for expenses, eg petrol,
wages
Payment for purchases (stock
for resale)
Purchase of fixed assets
LayoutLayoutThe cash flow forecast is broken down into
segments of time:
Months
Weeks
Days
LayoutLayoutThe first section records the money coming
into the business.heading
money gained through the sale of goods or services
money received from a third party – will require repayment plus interest
total flow of income into the business
LayoutLayoutThe second section records the expenditure made by the business during each segment
of time.
This is totalled at the end of the time segment.
LayoutLayout
All figures in £ January February
Income
Sales 600 1,000
Loan 1,000 0
Total Income 1,600 1,000
Expenditure
Purchases 800 500
Wages 400 400
Total Expenditure 1,200 900
LayoutLayoutThe final section is where the calculations are made. The business needs to see if there has been a greater outflow
than inflow of money.
Opening balance – the money that was available within the
bank/cash account at the beginning of the time period
Inflow/outflow is total income minus total
expenditure
Closing balance is opening balance add total inflow/outflow
LayoutLayoutJanuary February
Opening Balance 300 700
Total income 1600
Total expenditure 1200
Inflow/outflow 400
Closing Balance 700
Using the example above:
The opening balance in January was £300
Closing balance was opening balance + inflow/outflow = £700
The closing balance of January is the opening balance of February
Total income £1,600 – Total expenditure £1,200 = £400
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