The Statement of Cash Flows has historically given students a lot of heartburn b

The Statement of Cash Flows has historically given students a lot of heartburn but it really isnt that scary. A cash-flow statement simply stated reports the uses (where the cash was spent) and the sources (where the cash came from) of cash during a period. Lets start with a very simplistic set of facts. I run a CPA firm and I billed my clients $50K during the month of February. To earn that $50K I incurred $20K of wage expense and another $10K of overhead (rent utilities insurance etc.).So I made $20K profit right? So I am sitting pretty? Not necessarily. What if I now tell you that $40K of my billings have yet to be collected? And my E&O insurance carrier increased my premium and I had to pre-pay $10K of premiums this month. How does my cash flow differ from my profit? Will these transactions appear on my income statement? My cash-flow statement?