Cash Flow Statement

The Cash Flow Statement shows how cash moved in and out of your business over a period, organized into three activities: Operating, Investing, and Financing. It’s the report that answers “where did my cash go?” when profit and bank balance don’t match.

Open Reports → Cash Flow Statement and pick a date range (and, for multi-currency orgs, a display currency).

Reconciled data only

Like every report, the Cash Flow Statement draws from posted journal entries. Keep your bank accounts reconciled so the cash reconciliation at the bottom ties out — unreconciled statement lines won’t appear until you clear them.

The indirect method

AccountFUN builds the statement using the indirect method, the standard approach under both IFRS and US GAAP. You start with net profit (which is an accrual number, not a cash number) and then adjust it back toward cash by removing non-cash items and layering in the actual movements of your balance-sheet accounts.

Three groups of adjustments convert accrual profit into cash flow:

1. Non-cash items added back (depreciation, amortization, unrealized FX).
2. Working-capital movements — increases or decreases in current assets and current liabilities.
3. Investing and financing movements — non-current assets, non-current liabilities, and equity.

Where each account type lands

This is the key question: which of my accounts show up in which section? The answer is driven by an account’s type (the same classification that drives your Balance Sheet and Chart of Accounts), split by whether the account is current (tied to day-to-day operations) or non-current (long-term).

Operating activities

Operating covers the cash effects of day-to-day business — collecting from customers, paying suppliers, running the business. It starts from net profit and adjusts for working capital.

Income statement (rolled into the Net Profit starting line)

Revenue and expense accounts don’t appear individually. Instead they’re aggregated into the single Net Profit figure at the top:

Account type	Examples
Revenue, Sales, Other Income	Sales revenue, service income, interest earned
Expense, Direct Costs, Overhead	Rent, advertising, cost of goods sold

Non-cash add-backs (no cash left the business)

Account type	Why it’s added back
Depreciation	Depreciation & amortization charges reduce profit but don’t use cash — they’re added back. (Both depreciation and amortization expense share the Depreciation type.)
Unrealized FX	Period-end currency revaluation gains/losses are reversed out, since they’re mark-to-market, not cash.

Working capital — current assets

Cash changes from short-term assets tied to operations. An increase in one of these consumes cash (e.g. inventory grew because you spent cash buying stock).

Account type	Examples
Current Asset	Accounts Receivable (cash not yet collected from customers), short-term receivables
Inventory	Cash tied up in stock on hand
Prepayment	Cash paid early for services or goods

Working capital — current liabilities

Cash changes from short-term obligations. An increase here preserves cash (e.g. you owe a supplier more, so you haven’t paid them yet).

Account type	Examples
Current Liability	Accounts Payable, accrued expenses, wages payable, tax payable
Liability	General (current) liabilities — a plain Liability type is treated as current

Investing activities

Investing covers cash spent on or received from non-current (long-term) assets — the big purchases that grow the business over time.

Account type	Examples
Fixed Asset	Property, plant & equipment (machinery, vehicles, office equipment)
Intangible Asset	Patents, trademarks, software licenses acquired
Non-current Asset	Other long-term assets

Accumulated depreciation is not double-counted

The accumulated depreciation/amortization contra-asset accounts are excluded from Investing — their effect is already captured as the depreciation add-back in Operating, so it isn’t counted twice.

Financing activities

Financing covers how the business is funded — borrowing, repaying debt, and transactions with owners.

Non-current (long-term) liabilities

Account type	Examples
Non-current Liability	Long-term portion of loans, bonds, lease liabilities
Long-term Liability	Bank loans, mortgages, notes payable due beyond a year

Equity

Account type	Examples
Equity	Share capital, owner’s capital, paid-in capital

Retained Earnings is split

Retained Earnings is handled specially. The profit portion flows through Operating as Net Profit, so it’s not double-counted in Financing. But if Retained Earnings drops because you paid out dividends, that distribution shows up as a separate Dividends Paid outflow under Financing.

The full mapping at a glance

Account type	Section	Why
Bank	(cash pool)	Reconciled at the bottom, not shown as an activity
Current Asset, Inventory, Prepayment	Operating	Working capital
Fixed Asset, Intangible Asset, Non-current Asset	Investing	Long-term assets
Current Liability, Liability	Operating	Working capital
Non-current Liability, Long-term Liability	Financing	Long-term funding
Equity	Financing	Owner transactions
Revenue, Sales, Other Income	Operating	Via Net Profit
Expense, Direct Costs, Overhead	Operating	Via Net Profit
Depreciation	Operating	Non-cash add-back

The cash reconciliation

At the bottom of the statement, AccountFUN ties the three activities back to your actual cash. Cash and cash equivalents are your Bank accounts — the same balances shown on the dashboard.

The report checks that:

Net cash flow (Operating + Investing + Financing) = change in bank balances over the period

When this holds, the statement reconciles. If it doesn’t, a warning appears noting that a non-cash item may be misclassified. This can happen for benign reasons — some balance-sheet movements the indirect method models imperfectly — but it’s worth investigating.

Reading the report

• Net Profit leads Operating. A profitable business can still burn cash if working capital swells (e.g. customers paying slowly, inventory piling up).
• Only accounts that moved during the period appear. An account with zero net change is skipped, so the statement stays focused.
• Inactive accounts never contribute.
• Every amount is a link — click to drill into the Transactions Report scoped to that account and period.

Tips

• Positive Operating cash flow is the health signal. It means the core business generates cash. Consistently negative Operating cash funded by Financing is a warning sign.
• Compare periods by running the report across different date ranges — growing Investing outflows often mean you’re expanding capacity.
• For multi-currency orgs, a non-base display currency converts figures at the period rate (an amber banner notes the rate and date used).
• The Cash Flow Statement pairs with the Unrealized FX report at period close to understand your true FX exposure.