What is defined as the difference between incoming cash and outgoing cash?

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Prepare for the Certified Compensation Professional (CCP) Electronic Transactions Association (ETA) Exam with flashcards and multiple choice questions. Each question includes hints and explanations to enhance your understanding. Get ready for your CCP exam today!

The difference between incoming cash and outgoing cash is defined as cash flow. This concept is crucial for understanding a company's financial health, as it indicates how much cash is available to meet obligations, invest in business opportunities, or distribute to shareholders. Positive cash flow means that a company is bringing in more cash than it is spending, which is a fundamental aspect of maintaining operations and achieving growth.

Cash reserves refer to the money a business keeps on hand for emergencies or unexpected expenses, but they do not specifically reflect the ongoing transactions of incoming and outgoing cash. Cash management refers to the strategies and practices for efficiently collecting, handling, and using cash, which involves maximizing income and minimizing expenses but does not directly describe the cash inflow and outflow difference. Cash theft indicates illegal activity and is not relevant to the legitimate financial operations of a business.

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