![]() ![]() While that explanation seems simple enough, it's a big mess in practice, and the statement of cash flows helps investors sort it out. Accrual accounting requires companies to record revenues and expenses when transactions occur, not when cash is exchanged. ![]() The difference lies in a complex concept called accrual accounting. You may wonder why there's a need for such a statement because it sounds very similar to the income statement, which shows how much revenue came in and how many expenses went out. The statement of cash flows tells you how much cash went into and out of a company during a specific time frame such as a quarter or a year. ![]()
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