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What is a cash proof?

A cash proof is when you reconcile the cash inflows and outflows per the bank statements to the cash inflows and outflows per the financial statements. You would aggregate the net cash inflows or outflows between the two and reconcile the two sources of information. This basically confirms that the cash flow from the company’s financial statements is reflective of actual bank activity.

Bank statements: Cash inflows and outflows from the bank statements is basically just capturing the deposits and credits for a specific period. The idea is that deposits represent customer revenue and credits represent expenses paid by the company. There may be certain items that need to be excluded like transfer between two bank accounts owned by the company.

Financial statements: Cash inflows and outflows represents net income from the income statement, but you also have to factor in non-cash expenses, changes in balance sheet accounts, etc.

Below is a cash proof template that you can download and use!


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