Which term describes the money that goes in and out of a business?

The term that describes the money that goes in and out of a business is cash flow. This concept encompasses all cash transactions, including cash receipts from sales and cash payments for expenses, investments, and financing activities. Understanding cash flow is crucial for managing a business effectively, as it reflects the company's liquidity and ability to sustain operations, invest in new opportunities, and meet its obligations.

Net income, while related, specifically refers to the profit a company makes after deducting all expenses from total revenue, not the movement of cash itself. Operating expenses are the costs associated with running the day-to-day operations of the business but do not capture the total inflow and outflow of cash. Retained earnings represent the cumulative amount of net income that a company retains, rather than distributing it as dividends, and are a component of owner's equity rather than a direct measure of cash movement. Understanding the distinction between these related terms and cash flow is essential for effective financial management and analysis.