Term · Cash Flow

Cash-flow statement

Also called: statement of cash flows, cash flow statement
By Travis Liang, Founder, MosoFin Reviewed by Travis Liang · Edited
You might ask
“If the business was profitable, why did the bank balance still go down?”
Direct answer

Explain the change in cash by separating operating, investing, and financing activity.

See the numbers in context

The sample is illustrative. Use the same structure with your own reporting period and source records.

Direct answer

A cash-flow statement reconciles beginning to ending cash and cash equivalents. It shows cash from operations separately from asset purchases and funding. A business can report profit while cash falls because profit and cash receipts or payments follow different timing rules.

The three sections

  1. Operating activities relate to the core business and changes in working-capital accounts.
  2. Investing activities include purchases or sales of long-term assets and investments.
  3. Financing activities include borrowing, debt repayment, owner contributions, distributions, and similar funding activity.

When it is useful

Use it to explain changes in liquidity, evaluate whether operations generate cash, and separate normal business activity from borrowing or asset purchases.

What to verify first

Confirm that beginning cash plus net cash movement agrees with ending cash on the statement. Then compare with the relevant cash accounts, allowing for cash equivalents, restricted cash, and account scope before treating a difference as an error.

Common mistake

Do not substitute a profit-and-loss statement for cash-flow analysis. Noncash expenses, payment timing, customer collections, vendor payments, borrowing, and asset purchases can all separate cash movement from reported profit.

Agent-ready request

You can say this to MosoFin

Ask with

“Review the cash-flow statement for this period. Show operating, investing, and financing cash flows, identify the largest changes, and reconcile beginning to ending cash and cash equivalents as reported. Cite the source lines, compare with profit, and say if the statement or supporting balances are unavailable. Do not change any records.”

Further reading

Last reviewed August 13, 2026

Educational information only. Review source records and apply your organization's accounting policies and professional judgment before acting.