Cash and cash flow - AQAOpening and closing balance
The management of cash and cash flow is important as it can prevent a business from failing. Cash flow is the way that money moves in and out of a business and its bank accounts.
The opening balance is the amount of money a business starts with at the beginning of the reporting periodA reporting period is the amount of time covered by a set of financial statements. The reporting period is typically either for a month, quarter or a year., usually the first day of the month:
opening balance = closing balance of the previous period
If there is no previous period, then the opening balance will be zero.
For example:
closing balance for January = £5,650
therefore
opening balance for February = £5,650
Closing balance
The closing balance is the amount of money the business has at the end of the reporting period, usually the last day of the month:
