What does the statement of cash flows include from the balance sheet?

The statement of cash flows provides a detailed analysis of the cash inflows and outflows in an organization over a period of time. One of the essential components included in this statement is changes in working capital. Working capital represents the difference between current assets and current liabilities, and the changes in these accounts directly affect cash flow.

When evaluating the statement of cash flows, the changes in accounts like accounts receivable, inventory, and accounts payable indicate how much cash has been tied up in the business or released into the business during the accounting period. For example, an increase in accounts receivable signifies that more money is owed to the company, indicating a potential cash outflow, while a decrease would suggest cash inflow. Therefore, tracking these changes is vital to understanding a company's liquidity and cash management.

This contrasts with the other options. Starting capital expenditures relate to the investing activities rather than the balance sheet's impact on cash flow. Net income is a component of the income statement and not a direct entry in the statement of cash flows. Lastly, shareholders' equity contributions do not provide a cash flow perspective as they relate to financing activities and the overall capital structure rather than the direct cash flows from operating activities.

In summary, changes in working capital are crucial for