Statement of Cash Flows Strategy – Cash Flow Thought Process

Statement of cash flows strategy will go over how we can think about cash flows. The most obvious and direct way to think about cash flows is to think about the change in cash over a time period. To analyze a change in cash we can go to the general ledger to look at the detail of activity that happen for a period of time. The general ledger will show transactions related to cash by date. Although this method makes the most since is does have problems. The cash account will have a lot of transactions in the general ledger, more them most any other account. It may be difficult to re-categorize each transaction. We can also think about the cash flow using the accounting equation, and this is often the approach we will use in practice.
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