Understanding Cash Flow in About 5 Minutes By

Understanding Cash Flow in About 5 Minutes By Matthew Taylor This presentation is visually aided by memes such as| V

• Meme: Something (usually a picture on the Internet) that becomes so popular that it becomes an enormous overused joke.

More Assets = Less in Cash Account • To obtain assets, you must spend some of your hard-earned cash to purchase them. • Notable exception: As cash is considered an asset, you don’t have less cash in your cash account for obtaining it.

• Since I couldn’t find a good meme for the previous slide, here is a picture of a cat:

Less Assets = More in Cash Account • When you have less assets, it usually means that you have sold some of them. For example, if you sell your old computer for $500, you lost an asset (the computer), but you gained some money. • Notable Exception – You can also lose assets due to damage or theft. That is a rather unfortunate turn of events.

More Liabilities = More in Cash Account • Since you have something to pay off but you haven’t paid it off yet, you don’t lose money. This means that since you don’t lose any money, your account balance stays and in turn you have a higher balance of money in your cash account then you would have had if you had paid the liability! Easy, right?

Less Liabilities = Less in Cash Account • Since liabilities need to be paid for with cash, it makes sense that once you pay them off, you have less cash in your cash account, right?

More Equity = More in Cash Account • Since equity means assets minus liability, and cash is considered an asset, it’s logical that having more cash means having more equity, right? Assets – Liabilities = Equity +$ - No extra liabilities = + Equity

Less Equity = Less in Cash Account • Since assets minus liability equals equity and since cash is an asset, if you have less equity, you have either more liabilities or less assets. T more equity and cash.

Summary • • • Assets + (other than cash), Cash Account – Assets - (other than cash), Cash Account + Liabilities +, Cash Account + Liabilities -, Cash Account – Equity +, Cash Account+ Equity -, Cash Account – Easy-peasy!

Note To The Teacher: • I apologize if this gets me a bad mark; I was browsing the Internet and randomly got this idea for my cash flow Power. Point.