If an enterprise has high income but cash is not available on time, what problem may arise?
Answer and explanation
Correct answer: Cash-flow problem
Recorded income or sales does not always mean that cash has already been collected. Customers may owe money, or receipts may arrive after bills are due. Without timely cash, the enterprise may struggle to pay suppliers, workers, rent, or utilities even when accounts show income. This timing mismatch is a cash-flow problem.
Frequently asked questions
What is the correct answer to this question?
Cash-flow problem
Why is this the correct answer?
Recorded income or sales does not always mean that cash has already been collected. Customers may owe money, or receipts may arrive after bills are due. Without timely cash, the enterprise may struggle to pay suppliers, workers, rent, or utilities even when accounts show income. This timing mismatch is a cash-flow problem.
Which subject and chapter does this question cover?
This is a Class 11 Business Studies question. Chapter: Sources of Business Finance. Topic: Concept, nature and importance of business finance.
