A cash flow statement and a funds flow statement are important financial statements used by management to understand the movement of financial resources in a business. Both statements help managers analyse the financial position and financial performance of an organisation, but they differ in their scope, purpose, and treatment of financial transactions. In Accounting for Managerial Decisions, these statements are particularly useful because they provide information that supports planning, control, liquidity management, and other managerial decisions. A cash flow statement is a statement showing the inflows and outflows of cash and cash equivalents during a particular accounting period. It explains the changes in the cash position of an organisation between two balance sheet dates. Cash includes cash in hand and cash at bank, while cash equivalents generally include highly liquid short-term investments that can be readily converted into known amounts of cash. The main purpose of a cash flow statement is to show how cash has been generated and how it has been used during the period. Cash flows are generally classified into three major activities: operating activities, investing activities, and financing activities. Cash flows from operating activities arise from the main revenue-generating activities of the business. Examples include cash received from customers, cash paid to suppliers, wages and salaries paid, and operating expenses paid. This section helps management determine whether the normal operations of the business are generating sufficient cash. Investing activities relate to the acquisition and disposal of long-term assets and investments. Cash paid for purchasing machinery, buildings, land, or other fixed assets represents an investing cash outflow. Cash received from the sale of such assets represents an investing cash inflow. Investments in securities and proceeds from their disposal may also be included. This information helps