Closing balance is calculated by adding net cash flow to which value?

Closing balance is calculated by adding net cash flow to which value?

• A. Net cash flow
• B. Gross profit
• C. Turnover
• D. Opening balance

Answer: (D)

To work out the closing cash balance you start with the amount you have at the opening of the period and then add the net cash flow for the period. Net cash flow is the overall change in cash from the period (cash inflows minus cash outflows). So, closing balance = opening balance + net cash flow. For example, if you begin with 5,000 and your net cash flow for the period is +2,000, the closing balance would be 7,000. If net cash flow is negative, it reduces the opening balance. The other options aren’t used in this calculation: gross profit and turnover are income measures, not the cash balance adjustment, and net cash flow already represents the change rather than the starting point.

To work out the closing cash balance you start with the amount you have at the opening of the period and then add the net cash flow for the period. Net cash flow is the overall change in cash from the period (cash inflows minus cash outflows). So, closing balance = opening balance + net cash flow. For example, if you begin with 5,000 and your net cash flow for the period is +2,000, the closing balance would be 7,000. If net cash flow is negative, it reduces the opening balance. The other options aren’t used in this calculation: gross profit and turnover are income measures, not the cash balance adjustment, and net cash flow already represents the change rather than the starting point.