What term refers to the movement of cash into and out of a business?

• A. Capital
• B. Liabilities
• C. Cash Flow
• D. Revenue

Answer: (C)

Cash flow describes how cash moves into and out of a business. It shows the actual cash available to run operations, pay bills, invest, and finance activities. The cash flow statement splits these movements into operating activities (day-to-day business, like receipts from customers and payments to suppliers), investing activities (purchasing or selling assets), and financing activities (borrowing, repaying debt, or issuing equity). This concept is different from revenue, which is the income earned from selling goods or services (and can be recorded before cash is received), and from capital, which refers to the stock of funds or assets available rather than the flow of cash. It’s also distinct from liabilities, which are obligations to others. So the term that best fits the description is cash flow.