From the course: Accounting Foundations

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Overview of the cash flow statement

Overview of the cash flow statement

From the course: Accounting Foundations

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Overview of the cash flow statement

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- The statement of cash flows is the baby of the financial statements. The balance sheet, and the income statement, they've been around for over 500 years. In contrast, the statement of cash flows first started appearing in just 1988, so it's brand new in an accounting sense. Now, as we talk about the statement of cash flows, you're going to wonder why accountants didn't invent it sooner. I asked myself the same question. The idea behind the statement of cash flows is so simple. The statement of cash flows is a report of the amount of cash collected and the amount of cash paid by a company during a period: a month, a quarter, or a year. That's a pretty easy concept. We're just focusing on cash. How much cash did you collect? How much did you pay? Now, the structure of the statement of cash flows is to separate the cash flows into three categories: Operating activities, investing activities, and financing activities. Let me tell you what those three activities are. Operating activities…

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