Question

What is Cash Flow Statement?

Hint:

Shows actual cash inflows/outflows under operating, investing, and financing activities.

Answer 1

Step 1: Contrast it with the Profit & Loss Account:
While the P&L Account shows accrual-based profit, the Cash Flow Statement strips that down to pure cash movement — what actually came in and went out.

Step 2: Describe its three-way split:
It separately reports cash from day-to-day operations, cash used in or generated from buying/selling long-term assets (investing), and cash from raising or repaying capital/loans (financing), so users can see exactly where cash came from and went.

Final Answer:
A Cash Flow Statement tracks actual cash movement over a period, split into operating, investing, and financing activities, bridging the opening and closing cash balances.