Opening and closing balance

• What is the importance of cash flow in a business?

  It can prevent a business from failing
• What does cash flow represent in a business?

  Money movement in and out of a business
• What is the opening balance?

  Amount of money at the start of a period
• How is the opening balance determined?

  It equals the closing balance of the previous period
• What is the closing balance?

  Amount of money at the end of a reporting period
• How is the closing balance calculated?

  Closing balance = net cash flow + opening balance
• What is a reporting period in financial statements?

  • Time covered by financial statements
  • Typically a month, quarter, or year
• What are the key components of cash flow management?

  • Opening balance
  • Closing balance
  • Net cash flow
• What is the relationship between cash flow and business failure?

  • Poor cash flow can lead to business failure
  • Effective cash flow management is crucial