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Why may a business face a cash shortage even when its income appears high?

Answer and explanation

Correct answer: Because payments are received late while expenses are immediate

Cash flow depends on the timing of money received and money paid, not only on recorded sales or income. If customers buy on credit or pay late while wages, rent, and suppliers must be paid immediately, the business may show strong sales but lack available cash. Customer preference, a good name, and goal setting do not by themselves explain a cash shortage.

Related tags

Cash FlowIncomeExpensesBusiness FinanceIntroduction To EntrepreneurshipEntrepreneurial Skills IArtificial IntelligenceClass 9 Mcq

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