The essential difference between the statement of cash flows and the income statement is that:

(a) The statement of cash flows only deals with the items measurable in monetary terms, whereas the income statement also includes non-monetary items.

(b) The income statement is prepared for external users, whereas the statement of cash flows is prepared for internal users.

(c) The income statement is based on the accruals concept, whereas the statement of cash flows reports the cash received and paid.

(d) The statement of cash flows is a forecast of the future, whereas the income statement reports on historical events.