Which statement is true about cash flow within DoD fiscal operations?

• A. Both increase cash.
• B. Cash receipts increase cash balance; disbursements decrease cash balance.
• C. Cash receipts decrease cash balance; disbursements increase cash balance.
• D. Both have no effect on cash.

Answer: (B)

In cash flow, inflows and outflows move the cash balance in opposite directions. When cash is received, the cash balance increases. When cash is disbursed to pay obligations, the cash balance decreases. So, cash receipts add to the balance, while disbursements subtract from it. This aligns with how budgetary cash management works: money coming in raises available cash, money going out lowers it. The other statements would imply that disbursements add cash or that neither action affects cash, which doesn’t reflect the actual movement of funds. For example, receiving an appropriation or reimbursement increases cash; paying vendors or employees decreases cash.