Which of the following is not a loan cash flow?

Which of the following is not a loan cash flow?

• A. Beginning Balance
• B. Principal
• C. Interest
• D. Fees

Answer: (A)

In loan cash flow modeling, you focus on the actual money moving between borrower and lender in each period. The items that qualify as cash flows are the payments you make: principal, interest, and any fees charged or collected. The beginning balance, by contrast, is the outstanding amount of debt at the start of the period. It’s a status or carrying amount, not a cash transfer. It’s used to compute interest (beginning balance times the period rate) and to determine how much of a payment goes toward reducing principal, but it itself does not represent money changing hands in that period. So the beginning balance isn’t a cash flow, while principal, interest, and fees are.

In loan cash flow modeling, you focus on the actual money moving between borrower and lender in each period. The items that qualify as cash flows are the payments you make: principal, interest, and any fees charged or collected.

The beginning balance, by contrast, is the outstanding amount of debt at the start of the period. It’s a status or carrying amount, not a cash transfer. It’s used to compute interest (beginning balance times the period rate) and to determine how much of a payment goes toward reducing principal, but it itself does not represent money changing hands in that period.

So the beginning balance isn’t a cash flow, while principal, interest, and fees are.