Which term describes the money that flows out of a business during its operations?

Study for the BTEC Business – Personal Finance Exam. Test your knowledge with interactive quizzes and insightful explanations. Prepare effectively and excel in your exam!

The term that accurately describes the money that flows out of a business during its operations is cash outflows. This refers to all types of expenditures that a business incurs, including operational costs such as rent, utilities, salaries, inventory purchases, and other expenses necessary for running the daily operations. Understanding cash outflows is crucial for businesses to manage their liquidity, as it directly impacts their cash flow and financial health.

The other terms do not fit this definition accurately. Cash injections refer to incoming funds that augment the cash available for business operations. Cash withdrawals typically pertain to the money taken out of the business, often by owners or partners, which does not necessarily link to the operational outflows. Cash equivalents, on the other hand, refer to short-term investments that can be quickly converted to cash and do not describe outflows at all. Thus, the correct choice emphasizes the financial dynamics of a business's expenditure rather than the inflow or assets.

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