Operating, investing and financing — the three taps money flows through.
Module 1's most important warning was that profit is not cash. This is the statement that exists because of that warning — the one experienced readers open first, because it is the hardest to dress up.
Three taps, one bucket
The genius of the statement is sorting every cash movement by why it happened. Three reasons only:
Tap
Question it answers
Rosa's year
Operating
Did the day-to-day business generate cash?
+55,000
Investing
What did we spend on long-term assets?
(25,000)
Financing
What moved between us and lenders/owners?
(10,000)
Net change in cash
+20,000
Opening cash $10,000 + change $20,000 = closing cash $30,000 — and look back at the balance sheet: cash, $30,000. The statements lock together like gears. ✅
🔒
Keep reading with Pro
You are reading the free preview. Module 1 of every course is free forever — Pro unlocks the rest of this lesson, every other module of every course, removes ads, and adds workbooks and certificates.