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Statement of Cash Flows:The purpose of statement of cash flows is to show the cash receipts and payments of a business during a specific period. This means that statement of cash flows summarizes the amount inflows and outflows of the company. The statement of cash flows help the users to evaluate the company's solvency, liquidity, and financial flexibility. There are three different activities that are classified within the statement of cash flows that include operating activities, investing activities, and financing activities.

Operating activitiesreports the company's inflows and outflows in the income statement. This basically shows how much cash was generated from the company's services.Investing activitiesrefers to long-term assets and other business investments. It includes acquisition and dispositions of property, equipment, etc.Financing activitiesrefers to transactions involving debt, equity, and dividends.