The statement of cash flows explains why cash changed. Under the indirect method, operating cash flow starts with net income and removes noncash items and changes in operating working capital. Add depreciation back because it reduced profit without consuming cash. Subtract an increase in receivables because earned revenue has not yet been collected. Add an increase in payables because costs were recognized before payment.
Investing and financing cash flows appear separately. Remove a gain on asset sale from operating income, then report the full sale proceeds in investing. Owner contributions and loan proceeds belong in financing. A transfer between bank accounts does not change total cash. The sum of all sections must reconcile beginning cash to ending cash.