From the course: Finance and Accounting Tips

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The statement of cash flows

The statement of cash flows

From the course: Finance and Accounting Tips

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The statement of cash flows

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- The statement of cash flows is the baby of the financial statements. The balance sheet and the income statement have 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. As we talk about the statement of cash flows, you're going to think this thing is so awesome. Why didn't they invent it sooner? I actually asked myself that same question. Now, the idea is so simple. Cash, how much cash did you receive? How much cash did you pay? On the statement of cash flows, the cash flows are separated into three categories, operating activities, investing activities, and financing activities. To start, operating activities are the things you do every single day. Your operations, you collect cash from your customers and hopefully lots of it. You pay wages, you pay utilities, you pay your taxes, you pay your interest. Operating activities, they're the routine stuff that you do hundreds of times a…

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