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.