This chapter examines the statement of cash flows, which reconciles a firm’s beginning balance of cash to its ending balance of cash. Students learn that cash inflows and outflows can be better understood if they are categorized into operating, investing, and financing cash flows as required by accounting standards. In addition, the statement of cash flows’ relationship with both the balance sheet and income statement is discussed, with a particular emphasis on using our understanding of these relationships to use the indirect method when calculating cash flows from operating activities.