How to Find Cash at Beginning of Period

Understanding the “cash at beginning of period” is fundamental for comprehending an entity’s financial position and its flow of funds. This figure represents the total cash available at the start of a defined accounting cycle. Identifying this amount is a foundational step in financial analysis, providing the starting point for tracking all cash inflows and outflows. This article guides readers on how to locate or determine this figure for any given period.

Defining Cash at Beginning of Period

The “cash at beginning of period” refers to the total cash and cash equivalents an entity possessed when an accounting period commenced. This period can be a month, quarter, or full fiscal year, depending on the reporting frequency. This figure is always identical to the ending cash balance reported for the immediately preceding accounting period, a basic principle in financial accounting ensuring accurate cash movement. Cash includes balances in checking and savings accounts, and highly liquid short-term investments (cash equivalents). These equivalents are readily convertible to a known amount of cash, typically within 90 days, and present an insignificant risk of changes in value.

Identifying the Figure on Financial Statements

The beginning cash balance can often be directly identified by examining standard financial reports. These statements are prepared following generally accepted accounting principles, providing a consistent framework for financial reporting. Locating this figure involves looking at specific line items.

Balance Sheet

One source is the Balance Sheet from the prior accounting period. The Balance Sheet presents a snapshot of an entity’s assets, liabilities, and equity at a specific point in time. The line item labeled “Cash and Cash Equivalents” on the Balance Sheet dated at the end of the preceding period directly provides the ending cash balance, which then serves as the beginning cash balance for the current period.

Cash Flow Statement

Another direct source is the Cash Flow Statement for the current period. This statement details how cash and cash equivalents have changed over a period. At the top, a line item designated as “Cash at Beginning of Period” or “Beginning Cash Balance” provides this figure. This statement directly links the starting cash position to the ending cash position by showing all cash movements in between.

Methods for Deriving and Verifying the Figure

There are instances where the beginning cash figure may need to be compiled or verified, rather than simply located on a single statement. This is particularly relevant when dealing with multiple cash holdings or ensuring accuracy.

Deriving the Figure

For entities managing various financial accounts, deriving the comprehensive beginning cash figure involves summing the balances from all cash sources. This includes aggregating balances from all checking accounts, savings accounts, and any petty cash funds, along with the value of all cash equivalents held at the end of the prior accounting period. Each of these individual balances contributes to the total cash position at the close of the previous period, which becomes the starting point for the current one. For a newly established business or during its very first accounting period, the beginning cash balance will typically be zero, or it will represent the initial capital contributions made by its owners or investors.

Verifying the Figure

Should the identified beginning cash figure appear inconsistent or not align with other financial records, a reconciliation process becomes necessary. This involves systematically comparing the internal cash records from the end of the prior period with external statements, such as bank statements dated at that same prior period’s end. The reconciliation aims to identify and account for any outstanding items, such as checks issued but not yet cleared by the bank, or deposits made but not yet recorded by the bank. It also helps in identifying bank errors or transactions that were recorded by the bank but not yet by the entity, ensuring that the accurate beginning balance of the current period is established.