A cash-flow table tracks real money in and out. Read it by finding each month’s opening balance, adding cash received, subtracting cash paid, and comparing with the closing balance.
This lesson is part of SPM subjects and learning resources. It connects to linking an objective to evidence, since cash shows whether a target is workable.
How do I read each line?
Take the rows in order.
- Opening balance: cash at the start of the month.
- Cash received: money that actually arrived.
- Cash paid: money that actually left.
- Closing balance: opening plus received, minus paid.
Worked example: a fictional stall
Imagine a fictional enterprise, Warung Nasi Kerabu, invented for this lesson. The owner starts with RM2 000 of cash.
| Month | Opening | Cash received | Cash paid | Closing |
|---|---|---|---|---|
| 1 | RM2 000 | RM1 500 | RM1 800 | RM1 700 |
| 2 | RM1 700 | RM1 600 | RM1 900 | RM1 400 |
| 3 | RM1 400 | RM2 000 | RM1 700 | RM1 700 |
Month 1. 2 000 + 1 500 − 1 800 = 1 700. The cash fell by RM300, which can happen in a start-up month when equipment and ingredients are bought.
Month 2. 1 700 + 1 600 − 1 900 = 1 400. Cash fell again.
Month 3. 1 400 + 2 000 − 1 700 = 1 700. Cash rose by RM300.
Each closing balance equals the next month’s opening balance. That is a quick check for errors.
The mistake: reading sales as cash
In month 2, the stall made total sales of RM2 400, but RM800 of that was sold on credit to an office. The RM800 was paid in month 3. Only RM1 600 arrived in month 2.
| Reading | Month 2 figure | Result |
|---|---|---|
| Sales minus cash paid | 2 400 − 1 900 = RM500 gain | Looks comfortable |
| Cash received minus cash paid | 1 600 − 1 900 = RM300 loss | Cash actually fell |
The RM800 explains the month 3 jump: cash received there is 1 200 of new cash sales plus 800 collected, which is RM2 000.
The difference matters because rent and ingredients are paid from cash in hand, not from sales on paper.
What can the owner learn?
The table shows two months of falling cash, then a recovery. The lesson for the owner is to watch the gap between sales and cash, and to collect credit sales quickly, or avoid credit sales in a month with large bills.
Check yourself
A fictional stall opens a month with RM900. It receives RM1 100 in cash and pays RM1 350. What is the closing balance, and what does it mean for next month?
Answer
900 + 1 100 − 1 350 = RM650. The cash fell by RM250.
The next month opens with RM650. If the same pattern repeats, cash would fall to 650 − 250 = RM400, so the owner should look at costs or at cash received.
What to study next
Test this skill with the original mixed-skill practice, and see how to separate a guess from a tested fact in distinguishing an assumption from a tested observation.
If you want a teacher to walk through more cash-flow tables with you, see online one-to-one Entrepreneurship tuition.