FinTwinby Mentem

Learn accounting by tracing a transaction into cash

Trace a business's assets, profit and cash into a linked forecast before attempting an acquisition or venture case. Start with the relationship you cannot yet explain.

Reviewed .

Choose the gap you need to close

These descriptions guide practice rather than assign a grade. If a model stops balancing, return to the transaction before changing several cells.

A starting point based on work you can do
Your current levelSuggested starting point
New learnerStart with What a business owns and owes, then Separate profit from cash.
Can calculate a familiar answerTrace the same transaction through all statements and explain each sign before adding complexity.
Can explain and build a modelUse Aster Tooling to test whether a linked forecast stays consistent when an operating assumption changes.

Sources: Accounting basics; Aster Tooling: growth that must turn into cash.

Build the statements before the forecast

Attempt the exercise from a blank page and preserve your initial answer. Familiar statement links make acquisition and venture models easier to diagnose.

  1. Read What a business owns and owes. Identify the asset, liability and equity effects of a transaction.
  2. Continue with Separate profit from cash and Follow equipment through three statements. Distinguish recognition, collection and noncash expense.
  3. Use Connect profit, cash and the balance sheet, then Explain cash tied up in growth. Explain why an increase in operating working capital uses cash.
  4. Attempt Revenue before collection before moving into Aster Tooling. In the full case, follow the operating assumptions through the linked forecast.

Sources: Accounting basics; Connect profit, cash and the balance sheet; Revenue before collection; Aster Tooling: growth that must turn into cash.

A credit sale increases profit before cash arrives

Original fictional accounting example

Explain the profit, cash and balance-sheet effects of a service delivered on credit.

  • All amounts are fictional US dollars. A business begins with cash of 1,000, no liabilities and equity of 1,000.
  • It delivers a service for 300 on credit and records 80 of related costs paid in cash.
  • There is no tax, depreciation, inventory, financing or other transaction. The customer has not paid at period-end.
Show the worked reasoning
  1. Revenue of 300 less expense of 80 gives profit of 220.
  2. Receivables rise by 300. Operating cash flow is profit of 220 less that receivable increase of 300, giving a cash outflow of 80.
  3. Ending cash is 1,000 - 80 = 920. Assets are cash of 920 plus receivables of 300, or 1,220.
  4. With no liabilities, ending equity is opening equity of 1,000 plus profit of 220, or 1,220. The balance sheet reconciles.

The business earns 220 while cash falls by 80. The unpaid customer balance explains the difference.

Check your reasoning: Adding the receivable increase to profit as a source of cash counts an uncollected sale as money received.

Check whether you can explain the movement

Before advancing, change the example so the customer pays before period-end. Identify which balance-sheet account changes and why collection does not create revenue a second time. Then explain how a cash purchase of equipment differs from an immediate operating expense.

  • Reconcile assets with liabilities and equity without using a balancing plug.
  • Explain the sign of a working-capital change in ordinary words.
  • Separate an income-statement effect from the date cash moves.
  • Identify a missing assumption instead of inventing a number to close the forecast.

Use feedback to revise, then resume the same work

Curriculum checkpoints show explanations after checking an answer and provide Try again. A correct selection is evidence for that calculation. Written explanations use a separate self-review against published criteria.

For a core exercise, submit your own answer, compare the numerical feedback and revise the mistaken relationship. Your original submission remains separate from revisions. In curriculum writing, save the self-review after updating the explanation rather than treating the number as a grade for the prose.

Drafts save as you type when saving succeeds. Use the displayed save status and check account status for cloud saving; if saving fails, export a backup before closing. Return to the same exercise or saved case to continue. Marking a lesson read records reading separately from numerical checks.

Sources: Connect profit, cash and the balance sheet; Revenue before collection; Accounting basics.

Your next actions

  1. Choose a starting point using work you can explain unaided.
  2. Trace the fictional sale through profit, cash and the balance sheet.
  3. Attempt the linked credit-sale exercise and revise one error.
  4. Open Aster Tooling after the statement relationships are clear.

Put it into practice

Choose the first task that matches your preparation. These links open the FinTwin study workspace under its normal account and saved-work rules.

  1. What a business owns and owes

    Build the balance-sheet relationship before learning valuation.

  2. Separate profit from cash

    Distinguish earning revenue from receiving money.

  3. Follow equipment through three statements

    Trace an asset purchase and subsequent noncash expense.

  4. Revenue before collection

    Check the mechanics of an unpaid sale.

  5. Explain cash tied up in growth

    Extend the cash explanation to operating growth.

  6. Aster Tooling: growth that must turn into cash

    Apply the foundations in a linked operating forecast.

Try the task before revealing its worked answer. Compare the method, revise your reasoning and use the workspace’s save or review controls. Reading this guide does not record a completed lesson.

Sources and scope

This guide describes the current FinTwin lessons, exercises and model cases. The suggested study order and readiness checks are original educational guidance.

The linked lessons and cases document the current FinTwin curriculum. The suggested study sequence and readiness checks are educational guidance; they do not certify interview readiness.

  1. Accounting basics — FinTwin. Checked .
  2. Connect profit, cash and the balance sheet — FinTwin. Checked .
  3. Revenue before collection — FinTwin. Checked .
  4. Aster Tooling: growth that must turn into cash — FinTwin. Checked .