1.3.3 Cash and cash-flow - Word Drop

Money that a business can spend straight away is called ______. It is needed to pay day-to-day obligations such as wages, rent and supplier bills. A business that cannot pay its debts may become ______, which means it may be forced to close. Cash is not the same as ______, which is what is left when total costs are subtracted from total revenue.

A ______ sets out the cash a business expects to come in and go out over a future period, often a month. Money expected to be paid out, such as payments to suppliers, is recorded as cash ______, while money coming in is recorded as cash inflows. For each month, ______ is the total inflows minus the total outflows. Net cash flow can be ______ when the outflows in a month are larger than the inflows.

The ______ is the opening balance plus the net cash flow. It becomes the opening balance of the next month. If a forecast shows a negative closing balance, the business can plan how to cover the shortfall before it happens.