Question

What is meant by 'Cash Flow' while preparing Cash Flow Statement?

Answer 1

Cash flows refer to the movement of cash in and out of the business. Cash flows can be either inflows or outflows of cash and cash equivalents. A cash inflow implies receipt of cash by the business and cash outflow implies the payment of cash by the business. Cash inflows result in increase in the total cash balance while cash outflows result in decrease in the total cash balance.