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Statement of Changes in Financial Position:

Statement of Changes in Financial Position is also known as cash flow statements. Cash flow statement or FP is a report that is published by publically help companies every quarterly or annually. Publically held companies are those companies who sell their shares of stock to the public. There are three more reports other than Cash flow statement:

1. Income Statement
2. Statement of Retained Earnings
3. Balance Sheet

The main objective of Cash Flow Statement is to provide information to the organization about the cash receipts and cash payments. This way it helps in cash management as well. Therefore, we can say that cash flow statements are very important for every financial manager as it is his duty to properly manage cash and ensuring the availability of proper cash to meet the liabilities.

Preparation of Statements of Cash Flow:

There are 2 methods of preparing the Cash Flow statement:

1. Direct Method
2. Indirect Method

Both of the above methods of preparing Cash Flow Statements are acceptable under US GAAP. When statements are made, both have same results.

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