Managerial Accounting, v1.0: "Chapter 12, Section 1: Purpose of the Statement of Cash Flows"

The statement of cash flow provides cash receipt and cash payment information and reconciles the change in cash for a period of time. Cash receipts and cash payments are summarized and categorized as operating, investing, or financing activities. Simply put, the statement of cash flows indicates where cash came from and where cash went for a given period of time. Time is the important point of a cash flow, as in life, in business timing is everything. Without adequate cash flow suppliers could well refuse to deliver essential inputs and choke of your production and revenue stream. Once you have learned some of the basics of cash flow you will look at a typical case. The CEO of Home Store wants to know “where has the money gone”? Home Store is profitable but there is no money in the bank. You will soon see why this might be.