Cash flow statement

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1. Financial reporting - external.

The cash flow statement is one of the five primary published financial statements of larger reporting entities.

It shows the increase or decrease in cash (and cash equivalents) for the reporting period.

This is the same as the change - increase or decrease - in the cash and cash equivalents balances reported in the balance sheet.

The total cash inflow - or outflow - for the period is generally shown separately for:

  • Operating activities
  • Investing activities
  • Financing activities

The cash flow statement can be presented using the direct method or the indirect method.

The direct method sets out the gross cash flows explicitly.

The indirect method incorporates the profit or loss for the period - from the income statement - and relevant reconciling items to explain the differences between the cash flows and the income statement.

Relevant accounting standards include Section 7 of FRS 102 and International Accounting Standard (IAS) 7.

2. Accounting - internal.

An internal report giving similar information, but formatted according to internal management requirements.

It is good practice to ensure that any internal reports can be reconciled easily to the externally published information.

Also written cashflow statement.

Also known as a statement of cash flows.

See also