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The primary purpose of statement of cash flows is to reflect the true picture of cash (inflow and out flow) of an entity. By inflow and out flow it means Receipts and Payments. It mainly separates the cash (Receivables, Payables, Interest amounts, Purchase and disposal of Fixed assets and other investments) items from non-cash items (Depreciation)


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Answer added by Dewi Mahmudah Pirwadi, Administrative Assistant , Home Care Center for Domestic Workers Services, L.L.C8 years ago

The primary purpose of cash flows is to control inflow and outflow of an entity then we can monitor it"s progress. It is used to make some decisions to make better.