AP®︎ Business with Personal Finance: Topic 3.8 Flashcards

A financial statement showing how actual cash inflows and outflows changed a business’s cash balance during a reporting period

A transaction that increases cash, recorded when the business actually receives the cash

A transaction that decreases cash, such as a payment to employees, suppliers, lenders, shareholders, or the government

The change in cash during a period: total cash inflows − total cash outflows

The cash available at the end of a period: beginning cash balance + net cash flow

Ordinary business activities involving cash, such as collecting from customers and paying employees, suppliers, interest, and taxes

Cash transactions involving the purchase or sale of long-term assets and investments

Cash transactions that obtain or return financial capital, including loans, principal repayments, owners’ investments, and dividends

Total cash inflows exceed total cash outflows, increasing the business’s cash balance

Total cash outflows exceed total cash inflows, decreasing the business’s cash balance

Cash flow tracks actual cash received and paid, while profit is revenue minus costs and expenses; either can be positive when the other is negative

A business’s ability to access enough cash to meet financial obligations when they come due