A statement of cash flow (or cash flow statement) is used to record cash coming into and leaving a company. It lets investors know how things are going, where money is being sent from and where the business is sending it on to.
Uses of a statement of cash flow in accounting
The cash flow statement is not the same as a statement of income or the balance sheet. The cash flow statement has no information on it regarding future or predicted monies. This means the cash flow statement does not show sales that have been made on credit.
So, for example, a balance sheet may show that Mr. X bought a lawnmower from your gardening business last month for £100 and is paying for it at £10 a month for 10 months. The predicted overall income of £100 will be shown. On a cash flow statement, only the payments Mr. X has actually made in real terms to the business will appear.
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