Basic Accounting - Cash Flow Statement

Since revenue and expenses include credit and other accounting convents which do not match one to one with cash inflow and outflow, the cash flow statement records the flows of cash.

There are three kinds of cash flows:

  1. Operating Cash Flows: Cash flows that come from the company’s core business activities like those cash flows related to sales revenue and sales costs.
  2. Cash Flows from Investments: Buying and selling property, plant, and equipment and other long-term assets along with securities gains and losses.
  3. Cash Flow from Financing Activities: Cash from raising funds like issuing equities or bonds. It could also be outflows in interest payments or buybacks etc.

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