Your cash flow statement shows the way cash goes in and out of your business, while your income statement shows all of your expenses for the year. The cash flow statement lists your cash balance — the sum total of all cash transactions. You have to adjust your net income from your income statement to account only for cash transactions when creating your cash flow statement.
Find the company's net income on the income statement. Write it down as the starting point for your cash flow statement.
Examine the income statement. Look for depreciation expenses. If there are any depreciation expenses, add them back into net income on your cash flow statement.
Look for increases in accounts payable on the income statement. Subtract these from the net income on your cash flow statement. If there are any increases in accounts receivable, add them back to your net income.The total net income after making these adjustments is your cash balance.