In accounting, cash refers to the most liquid form of assets—money that is readily available for use. This includes physical currency (bills and coins), funds in checking or savings accounts, and other instruments that can be quickly converted to cash, such as money orders and bank drafts. Cash is a critical component of a business’s financial health, as it enables the company to meet day-to-day expenses, pay suppliers, cover payroll, and manage short-term obligations.

On a company’s balance sheet, cash is recorded as a current asset and often appears as the first line item. Strong cash flow—meaning a steady inflow of cash from operations—is essential for sustaining operations and funding growth. Conversely, poor cash management can lead to difficulties even if the business is profitable on paper.

Cash should not be confused with cash equivalents, which include short-term, highly liquid investments like Treasury bills that are easily converted into cash within three months. Maintaining accurate records of cash transactions is vital for internal control and external reporting, helping ensure that the business remains financially stable and trustworthy in the eyes of banks, investors, and tax authorities. In short, cash is the lifeblood of any business operation.