The cash flow statement is the name commonly used by practicing accountants for the statement of cash flows or SCF. We will use these names interchangeably throughout our explanation, practice quiz, and other materials. The cash flow statement is required for a complete set of financial statements. The cash flow statement is different from the balance sheet and income statement, because, it does not include the future transaction of cash listed on credit. Therefore, money is not equal to net income, whereas, on the income statement and balance sheet, it should be equal, including cash sales and sales made on credit. Cash flow is the net cash and cash equivalents that move in and out of a company’s financial statement. Simply put, a cash flow statement is a summary of different sources and applications of cash during a specific time period and analyses the reasons behind changes in cash balance between the two balance sheet dates.
