 Recall that one of the primary purposes of the statement of cash flows is to explain the change in cash. As you can see here, all the balance sheet tells us is that cash increased $2,350, but it doesn't tell us why. So here we have a summary statement that shows the net cash flows from operating, investing, and financing activities. You can see that they result in a net cash increase of $2,350. This is very important that the net change in cash tie to the change in cash reported on a comparative balance sheet. They must match. When completing the statement of cash flows, the net change in cash is added to the beginning cash balance. The result is the ending cash account balance, and this must match what is reported on the balance sheet. One final disclosure relates to non-cash investing in financing activities. Recall that our example company issued bonds in exchange for property plant equipment. You can see the journal entry doesn't involve the cash account, so this transaction won't be included in the calculations of the statement. But it is still reported as a disclosure item on the statement of cash flows. Significant non-cash investing and financing activities are disclosed on the statement of cash flows as shown here. Finally, here is our completed statement of cash flows using the indirect method.