What is cash inflow?

• A. Expenses incurred by the enterprise
• B. Any cash that comes into the enterprise
• C. Profits retained for future investment
• D. Debts owed by customers

Answer: (B)

Cash inflow refers to any cash that comes into the enterprise from various sources, such as sales revenue, loans, investments, or any other form of incoming funds. This concept is crucial for businesses as it indicates the liquidity and financial health of the enterprise. Understanding cash inflows helps businesses manage their operations efficiently, ensuring that there are enough funds available to cover expenses, invest in growth opportunities, and provide a buffer during lean periods.

The other options do not represent cash inflow. For instance, expenses incurred relate to cash outflow, as these are costs that reduce the amount of cash available. Profits retained for future investment indicate a decision made after cash inflows have already been realized and do not directly pertain to the inflow itself. Debts owed by customers are accounts receivable, which are expected cash inflows in the future but not actual cash that has come in at that moment. Understanding cash inflows is fundamental for managing a business’s financial operations effectively.