The table shows an extract from a cash flow statement for a business - HSC - SSCE Business Studies - Question 24 - 2014 - Paper 1

To determine the month the business started with a negative cash balance, we can calculate the cash balance for each month sequentially:

• January: Opening Cash = $5000 (positive)
• February:
  • Cash In = $5000, Cash Out =$3000
  • Closing Cash = $5000 +$5000 - $3000 =$7000 (positive)
• March:
  • Cash In = $3000, Cash Out =$5000
  • Closing Cash = $7000 +$3000 - $5000 =$5000 (positive)
• April:
  • Cash In = $2000, Cash Out =$8000
  • Closing Cash = $5000 +$2000 - $8000 = -$1000 (negative)

Thus, the business started with a negative cash balance in April.

Government influences on the financial management of businesses can vary widely and can impact crucial operational aspects. Below are key influences:

1. Taxation Policies:
   • Businesses are subject to various taxes, including corporate tax, payroll tax, and sales tax. Understanding these tax obligations is essential for financial planning.
2. Regulatory Compliance:
   • Regulations set by government bodies, such as the Australian Securities and Investments Commission (ASIC), can dictate financial practices and reporting standards, ensuring transparency and accountability.
3. Financial Aid and Subsidies:
   • Governments may offer financial assistance or subsidies to support certain industries, influencing business financial strategies.
4. Economic Policies:
   • Government monetary and fiscal policies can affect interest rates, inflation, and overall economic conditions, influencing borrowing and investment decisions for businesses.

In summary, businesses must navigate these government influences to ensure they remain compliant, competitive, and financially sound.