What accounting tool shows the net amount of money moving in and out of your business?

A3 Template

Income statement

Cashflow statement

Balance sheet


Choose an option to see if it’s correct. Check the explanation below.

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Explanation: What accounting tool shows the net amount of money moving in and out of your business?


Explanation: The correct answer is **Cashflow statement**. Unlike the balance sheet, which provides a snapshot of a company's financial position at a specific point in time, and the income statement, which details revenues and expenses over a period, the cash flow statement focuses exclusively on the movement of cash in and out of a business during a specified period, typically a month, quarter, or year. It outlines the sources and uses of cash, including operating activities (such as revenue from sales and payments to suppliers), investing activities (such as purchases or sales of assets), and financing activities (such as borrowing or repaying loans). By analyzing the cash flow statement, stakeholders can assess a company's liquidity, cash-generating ability, and ability to meet short-term obligations. It provides insights into whether a business is generating sufficient cash to cover operating expenses, invest in growth opportunities, and service its debt obligations. As such, the cash flow statement is a critical tool for financial analysis and decision-making, offering valuable insights into a company's financial health and sustainability. Therefore, among the options provided, the cash flow statement is the accounting tool that shows the net amount of money moving in and out of a business, making it the correct answer.
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