The cash flow statement has three broad categories Cash flow from operations, cash flow from investments or investing activities and cash flow from financing or financing activities We need to find the labels that go into each of these sections and we can use the balance sheet to act as our checklist here So let's go up to our balance sheet I need to go down through the balance sheet and workout where each item would go into my cash flow statement The first one's cash but this actually the output from your cash flow statement So we're not going to think of that going into operations, investing or financing Our second one here though is investments. So the clue is kind of in the title here Investments! We think that's going to be an investing activity So I'm going to put an "i" next to that to remind me, put change in investments into your cashflow statement Next up is accounts payable, is that operating, investing or financing? Well accounts payable? That's a part of your operations because that's me owing my suppliers Suppliers are a key part of my operations, if I wasn't supplied, I wouldn't be able to have any products to sell So that's going to go into my operations and I'll put an "o" next to that Long -term debt? That's money that I've got from my financiers, so that's going to be a financing activity Last up, equity? I need to ask myself, why has equity gone up in my balance sheet? It's gone up due to net income Net income looks at revenues from operations, costs from operations, that is an operating item So each of these balance sheet line items will help me come up with a cashflow statement line item Quite a simple balance sheet here and we've only got four items being: Change in investments, change in accounts payable, change in long-term debt and then it was net income that resulted in equity Let's write them up in our cashflow statements So we start with net income. I then want any increase of decrease in accounts payable Now you've noticed, I've put brackets around the decrease because that's going to be a cash outflow Cash outflow is going to give me a negative in my cashflow statements Same for investments, investments was an investing activity So I want an increase or a decrease in investments You might notice here that I've put the brackets around the increase If I'm increasing investments, I must have purchased some investments Therefore that has lead to my cash outflow The last one was long-term debt which was a financing activity Increase or decrease in long-term debt Again you'll notice, I've put the brackets around the decrease If my long-term debt has decreased, that means I must have paid some of it off And fantastic! There is my cashflow statement with all of its labels in, ready to go.