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Definition

Statement of cash flows

Statement of cash flows refers to a financial statement that summarizes information about the cash inflows (receipts) and cash outflows (payments) for a specific period of time and details why the change occurred. The statement of cash flows reports (1) the cash effects of a company’s operations during a period, (2) its investing transactions, (3) its financing transactions, (4) the net increase or decrease in cash during the period, and (5) the cash amount at eh end of the period.

The statement of cash flows is similar to a month-end bank statement. It reveals how much cash is on hand at the end of the month as well as how the cash was acquired and spent during the month.

Statement of cash flows is a basic financial statement that provides information about the cash receipts, cash payments, and net change in cash during a period, resulting from operating, investing, and financing activities.

The information in a statement of cash flows should help investors, creditors, and other assess:

  1. The entity’s ability to generate future cash flows
  2. The entity’s ability to pay dividends and meet obligations.
  3. The reasons for the difference between net income and net cash provided (used) by operating activities.
  4. The cash investing and financing transaction during the period.

Statement of cash flows is the statement showing the sources and uses of cash during a period of time.


Financial statement showing the flow of cash into and out of a business during a period of time.

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