If the three types of business activities are operating, investing, and financing, then there needs to be a way to provide information about the money going into and out of each piece. Thankfully through the miracle of modern accounting, we have a statement that does exactly that.
The statement that tracks these fluxuations in the cash flow is quite logically called, the ‘Statement of Cash Flows’. From this statement you can easily determine how a company is treating that little recourse that they work so hard to aquire.
Here is a sample statement to show you the three areas and their relationship to each other. You can see that it is in essence three cash flow statements (one for operating, one for investing, and one for the financing activities) wrapped up into one overall master statement.
Statement of Cash Flows
For the month ending December 31, 3000
(In Gazillions of Planet Aridni Dollars)
|Cash Flows from operating activities|
|Cash receipts from operating activities
Cash payments for operating activities
|Net cash provided by operating activities||$5,700|
|Cash Flows from investing activities|
|Purchased office supplies||(5,000)|
|Net cash used by investing activities||(5,000)|
|Cash Flows from financing activities|
|Issuance of common stock
Issued note payable
Payment of dividend
|Net cash provided by financing activities||14,500|
|Net increase in cash||15,200|
|Cash at beginning of period||0|
|Cash at end of period||15,200|