how is the cash flow statement linked to business activities 
the cash flow statement is linked to all three business activities operating investing and financing to comply with generally accepted accounting principles gaap financial statements must include a statement of cash flows 6 it provides a detailed reconciliation of net income on an accrual basis to actual cash flow the process begins by taking net income from the bottom of the income statement adjustments are then made to account for the cash impact of changes in balance sheet items converting accrual based net income to cash based figures non cash items previously deducted from or added to net income are reversed to reflect true cash flow the result is a report that gives the investor a summary of business activities within the company on a cash basis segregated by the specific types of activity 