Teaching the Statement of Cash Flows

In this paper, we offer ways of improving both student comprehension of and appreciation for the importance of the Statement of Cash Flows (SCF). Specifically, the paper presents four modules aimed at improving student understanding of the concepts underlying the Statement of Cash Flows. As part of these modules, examples of cash flow patterns taken from actual financial statements are provided. In addition, the paper presents the calculation of net cash flow from operating activities under the indirect method as a reconciliation process which focuses on understanding the timing differences between accrual and cash basis accounting.