The statement of cash flows provides a presentation of cash flow information that complements the accrual basis financial statements. The operating activities category in the statement of cash flows is not a cash basis operating statement. The classification of cash flows is functional, usually based on the nature of the underlying transaction.
The primary purpose of the statement is to provide relevant information about the agency's cash receipts and cash payments during a period.
When used with related disclosures and information in the other financial statements, the cash flows statement provides users of the financial report the following relevant information about the agency:
- Its ability to generate future net cash flows
- Its ability to meet its obligations as they come due
- Its needs for external financing
- Reasons for differences between operating income and associated cash receipts and payments
- Effects on the agency's financial position of both its cash and its noncash investing, capital, and financing transactions during a period
