8. Changes in Financial Position

The financial reports of public companies usually contain three main items—balance sheet, income statement, and statement of changes in financial position. The purpose of the statement of changes in financial position is to make clear the flow of funds into, through, and out of the company. In the past, this statement was often called a funds flow statement.

We have seen that the balance sheet and income statement do not show the flow of cash and other financial resources very well. It is not always easy to see where the funds came from. It is not always easy to see what they were used for. The statement of changes in financial position attempts to reveal this information.

Basically, this statement shows the changes ...

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