Question 1: Define the term 'cash flow' in the context of a business enterprise.

Answer: Cash flow refers to the movement of money into and out of a business over a specific period, including income received and expenses paid.

Question 2: List three sources of finance that a new business might use to raise capital.

Answer: Bank loans, personal savings, and investment from family or friends.

Question 3: Explain why it is important for a business to keep accurate financial records.

Answer: Accurate financial records help a business monitor its income and expenses, prepare for taxes, make informed financial decisions, and attract investors or loans.

Question 4: Identify and describe two types of costs that a business incurs.

Answer: Fixed costs are expenses that do not change with the level of production, such as rent. Variable costs vary with production volume, such as raw materials.

Question 5: Sketch a simple pie chart that shows a hypothetical distribution of a business's monthly expenses. Label the sections as 'Rent', 'Salaries', 'Materials', and 'Utilities'.

Answer: A pie chart divided into four sections with sizes proportional to typical expense percentages; each section labeled accordingly.

Question 6: Describe what a profit and loss statement (income statement) shows about a business.

Answer: It shows the business's revenues, expenses, and profit or loss over a specific period, providing insight into financial performance.

Question 7: Draw a basic example of a simple cash flow forecast for a small business for one month, including at least two income sources and two expenses.

Answer: A table or list showing income sources such as sales and investments, and expenses like wages and bills, with expected amounts and dates.

Question 8: Explain the difference between 'debt' and 'equity' financing.

Answer: Debt financing involves borrowing money that must be repaid with interest, while equity financing involves raising money by selling shares of the business, giving investors ownership.

Question 9: Identify what an entrepreneur should consider when choosing a source of finance for their enterprise.

Answer: They should consider the cost of finance, repayment terms, impact on ownership, speed of access, and suitability for their business needs.

Question 10: Sketch a simple bar graph comparing the income and expenses of a business over three months. Label the axes and each bar clearly.

Answer: A bar graph with time (months) on the x-axis and amounts on the y-axis. Two bars per month—one for income and one for expenses—showing their respective values.