CASH FLOW STATEMENT:

In 1998, the CICA revised section 1540 of the CICA Handbook, changing the “statement of changes in financial position” to “cash flow statement.” This does not affect the preparation of the cash flow statement, which is still based on cash and cash equivalents. This applies to all businesses unless a business has relatively simple operations, with few or no significant financing and investing activities, and their effects on cash flows are apparent from the other financial statements or are adequately disclosed in the notes to the financial statements
For example, the cash flow statement does not apply to pension plans or not for-profit organizations. The CFS is similar to an income statement in that it summarizes the activities of a company during a given period. An income statement, however, only reports on operating activities. The CFS not only reports on operating activities, but also on investing and financing activities. Another key difference between the income statement and the CFS is that the income statement is prepared using the accrual basis of accounting, but the CFS includes inflows and outflows of cash or cash equivalents, thus it is prepared on a cash basis.