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Which one of the following is a definition of insolvency? Select one answer - Edexcel - GCSE Business - Question 6 - 2022 - Paper 1
Question 6
Which one of the following is a definition of insolvency? Select one answer. A A product becoming obsolete. B Business failure due to unpaid debts. C Generating ... show full transcript
Worked Solution & Example Answer:Which one of the following is a definition of insolvency? Select one answer - Edexcel - GCSE Business - Question 6 - 2022 - Paper 1
Step 1
Which one of the following is a definition of insolvency?
Answer
The correct definition of insolvency is B: Business failure due to unpaid debts. Insolvency refers to the situation where an individual or organization cannot meet their financial obligations to creditors as debts become due.
Step 2
Using the information in Figure 1, calculate the total net cash-flow from May to August.
Answer
To calculate the total net cash-flow from May to August, follow these steps:
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Identify Total Cash Inflows and Cash Outflows:
- For each month (May, June, July, August), extract the values from the graph for both cash inflows and cash outflows.
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Calculate Month-wise Net Cash Flow:
- Net Cash Flow for each month = Cash Inflows - Cash Outflows.
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Sum Up the Monthly Net Cash Flows:
- Total Net Cash Flow = (Net Cash Flow in May) + (Net Cash Flow in June) + (Net Cash Flow in July) + (Net Cash Flow in August).
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Show Workings:
- E.g., If the values are:
- May: Cash Inflows = 5000, Cash Outflows = 1000 → Net Cash Flow = 5000 - 1000 = 4000
- June: Cash Inflows = 6000, Cash Outflows = 2000 → Net Cash Flow = 6000 - 2000 = 4000
- (Continue for the remaining months)
- Add all months to get the total net cash flow.
- E.g., If the values are: