What Is A Statement Of Cash Flow?

A statement of cash flow is a financial report related to an entity that shows its inflow and outflow of money or cash during a given period of time. It is one of the several financial reports that are necessarily required to be disclosed as per the SEC in the United States in the case of publicly traded companies. In this report it becomes clear how changes in the Profit and Loss account along with Balance Sheet items affect the position of liquid money. It is used to determine the short term stability and standing of a company. A cash flow statement is important to the creditors, investors, employees, partners, statutory bodies etc related to the Company or Firm. A cash flow statement is prepared subject to the provisions of Accounting Standard 7 of the International Accounting Standard.