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An extract from Pasha's Carpets' cash flow forecast for August 2019 is shown below - OCR - GCSE Business - Question 10 - 2019 - Paper 1

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An extract from Pasha's Carpets' cash flow forecast for August 2019 is shown below. | | August | |-------------|---------| | £ | | | ... show full transcript

Worked Solution & Example Answer:An extract from Pasha's Carpets' cash flow forecast for August 2019 is shown below - OCR - GCSE Business - Question 10 - 2019 - Paper 1

Step 1

Calculate the Net Cash Flow

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Answer

To calculate the Net Cash Flow, use the formula:

Net Cash Flow=Total Inflow−Total Outflow\text{Net Cash Flow} = \text{Total Inflow} - \text{Total Outflow}

Substituting the given values:

Net Cash Flow=44,000−45,500\text{Net Cash Flow} = 44,000 - 45,500

Thus,

Net Cash Flow=−1,500\text{Net Cash Flow} = -1,500

Step 2

Calculate the Closing Balance

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Answer

Next, we calculate the Closing Balance using the formula:

Closing Balance=Opening Balance+Net Cash Flow\text{Closing Balance} = \text{Opening Balance} + \text{Net Cash Flow}

Substituting the values:

Closing Balance=−1,100+(−1,500)\text{Closing Balance} = -1,100 + (-1,500)

Thus,

Closing Balance=−2,600\text{Closing Balance} = -2,600

This matches the provided closing balance, indicating the calculations are consistent.

Step 3

Select the Expected Net Cash Flow

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Answer

Based on the calculations, the expected Net Cash Flow is -£1,500, corresponding to option B.

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