What kind of account is a cash flow account? Is it considered a liability, asset or...

What kind of account is a cash flow account? Is it considered a liability, asset or something else?

Expert Solution

Ans:

Cash flow account is not an asset or liability account. Cashflow account is a statement which shows the flow of Cash during a period. It represents all cash generated and spent from the opreations of the business.

Cashflow account states the cash movement of the business. There are two method of Cash Flows; direct or indirect to represent how Cash of the company flows from different account. Cash flow statement is simply a reconciliation between a company's Opening and closing cash balances.

Where is asset and liabilities accounts are used to represent a Balance Sheet. Assets and liabilities are the part of balance sheet to identifity the net worth of Business.

So cash flow account is not an asset or liability account. Its a statement which records the flows of Cash in and out for monitoring of Money in Businesses.

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ekkarill92 answered 2 years ago

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