CXC CSEC Cash Flow Questions
principles of accounts cxc csec can you give me some exam styled questions on cash flow
projection for the 6 month period
Here are some exam-style questions related to cash flow projections for the CXC CSEC Principles of
Accounts syllabus. These questions are designed to test your understanding of cash flow forecasts,
how they are prepared, and how to interpret them.
Question 1: Preparing a Cash Flow Projection
The following information relates to the operations of a small business for the next six months:
Opening cash balance on January 1, 2024: $5,000.
Expected monthly sales (cash):
January: $12,000
February: $10,000
March: $8,000
April: $15,000
May: $12,500
June: $14,000
50% of sales are made on credit, and the business collects 50% of credit sales one month after
the sale is made.
Expected monthly expenses:
Rent: $1,500 (paid at the start of each month)
Wages: $2,500 (paid at the end of each month)
Utilities: $600 per month
Miscellaneous: $400 per month
Equipment purchase in March: $3,500 (cash)
Owner will withdraw $1,000 per month as drawings.
Required:
1. Prepare a six-month cash flow projection for the business from January to June 2024.
2. Explain two reasons why it is important for a business to prepare a cash flow forecast.
Question 2: Analyzing a Cash Flow Projection
The following is the cash flow projection for a small business from January to June 2024:
Month Opening Balance Cash Receipts Total Cash Available Payments Closing Balance
January 5,000 10,000 15,000 9,000 6,000
February 6,000 8,000 14,000 12,000 2,000
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Month Opening Balance Cash Receipts Total Cash Available Payments Closing Balance
March 2,000 9,000 11,000 14,000 (3,000)
April (3,000) 15,000 12,000 11,000 1,000
May 1,000 12,500 13,500 10,500 3,000
June 3,000 14,000 17,000 13,000 4,000
Required:
1. Identify the month where the business experiences a cash flow deficit.
2. Suggest two strategies the business can use to deal with this cash flow problem.
3. Calculate the total cash inflows and outflows over the six-month period.
Question 3: Cash Flow Projection with Loan and Interest
A business plans to take out a loan of $10,000 in March. The loan will be repaid in monthly
installments of $2,500 starting in May, with an interest rate of 5% on the outstanding balance.
Required:
1. Prepare the cash flow projection for March to June, including the loan and repayment schedule.
2. Calculate the total interest paid by the end of June.
These questions will test your ability to prepare and analyze cash flow projections and explore
strategies for managing cash flow deficits, loan repayments, and the importance of cash flow
forecasting in business planning.
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