Cash Flow

Cash flow refers to the movement of money into and out of a business. Positive cash flow indicates the company can meet financial obligations, while negative cash flow suggests liquidity issues. Cash flows are classified into operating, investing, and financing activities.

- Used in day-to-day bookkeeping and journal entries to record transactions correctly.
- Used when preparing trial balances and reconciling accounts.

- Example: Accountants use **Cash Flow** when recording transactions and preparing the trial balance.

- Why it matters: Ensures accurate records, supports reliable reporting, and reduces posting and reconciliation errors.