The cash account should always have a debit balance or be equal [zero balance].
Otherwise, the account will be in error.
Luca Paciolo, Particularis de Computis et Scripturis
The Cash Flow Statement is nothing more than a summary of activity in the company’s cash account. It summarizes how the cash account was debited and credited by the company’s operating, investing, and financial activities during a particular period of time. The debits are referred to as “input” in the report while the credits are therein referred to as “output.”
Typically, a Cash Flow Statement, like an Income Statement, summarizes activity for a particular fiscal period. However, unlike the Income Statement, the Cash Flow Statement does not require that the company’s books be closed before its preparation. This means that, although the Cash Flow Statement summarizes a time period, it is not locked into the constraints of a fixed fiscal period such as the Income Statement is. A Cash Flow Statement could, theoretically, be prepared at any time without the closing of the books and the use of temporary accounts that exist only for the company’s fiscal period.
The Cash Flow Statement could be prepared on a weekly, monthly, or even daily basis. The only impediment to this powerful ability to create useful information is the intensive labor that is required to create the Cash Flow Statement and the only solution to this impediment is to store all of the financial transactions in a data warehouse. A Cash Flow Statement for any time period desired can be prepared effortlessly in seconds with a simple command to a well-designed financial data warehouse.
The use of a data warehouse to back up an accounting system (or be the accounting system) is the key to producing real-time financial statements for arbitrary time periods. This fact is most apparent in the case of the Cash Flow Statement and its growing importance within the company. See Banking the Past, p. 169.
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