Agricultural Engineering 2025 – 400 Free Practice Questions to Pass the Exam

The term that describes the difference between cash receipt and cash disbursement is indeed cash flow. Cash flow refers to the movement of money into and out of a business or individual’s financial accounts. More specifically, it encompasses all incoming cash (cash receipts) from sales, loans, or other sources, and all outgoing cash (cash disbursements) for expenses, purchases, and other liabilities.

Understanding cash flow is crucial for managing finances effectively, as it gives insights into the liquidity of a business, showing whether it has enough funds to meet current obligations. A positive cash flow indicates that cash receipts exceed cash outflows, while a negative cash flow means the opposite.

Other terms like profit and net income are closely related to overall financial performance, but they consider other factors like expenses, cost of goods sold, and taxes. The balance sheet, on the other hand, reflects the financial position of a business at a specific point in time, detailing assets, liabilities, and equity, rather than focusing primarily on cash movements.