Using accounting equation analysis to teach the statement of cash ¯ows in the ®rst ®nancial accounting course David O'Bryan a , Kevin T. Berry b , Coleen Troutman b , Jerey J. Quirin c, * a Department of Accounting, Pittsburg State University, Pittsburg, KS 66762, USA b Department of Accounting, Bradley University, Peoria, IL 61625, USA c School of Accountancy, Wichita State University, Wichita, KS 67260, USA Received 1 March 2000; received in revised form 1 June 2000; accepted 1 July 2000 Abstract Understanding the statement of cash ¯ows requires that students have some knowledge of accrual-basis accounting. This means that coverage of the statement of cash ¯ows is deferred until late in the introductory ®nancial accounting course and related textbooks, a time when student motivation and retention may be waning. The timing of statement of cash ¯ow cov- erage is unfortunate for two reasons. First, the statement of cash ¯ows is an important topic that all business students need to understand. Second, most students understand cash ¯ows at the start of their ®nancial accounting class, so there is no reason to defer coverage of this topic. This paper describes a user-oriented, pedagogical approach to integrating the statement of cash ¯ows throughout the ®rst ®nancial accounting course. The essence of this approach is the use of an expanded accounting equation with temporary cash accounts corresponding to the major categories on the statement of cash ¯ows. Directly capturing cash ¯ow information simpli®es the preparation of the statement of cash ¯ows. # 2000 Elsevier Science Ltd. All rights reserved. J. of Acc. Ed. 18 (2000) 147±155 www.elsevier.com/locate/jaccedu 0748-5751/00/$ - see front matter # 2000 Elsevier Science Ltd. All rights reserved. PII: S0748-5751(00)00010-5 * Corresponding author. Tel.: +1-316-978-3215; fax: +1-316-978-3660. E-mail addresses: jquirin@twsu.edu (J.J. Quirin), obryan@pittstate.edu (D. O'Bryan), kberry42@- bradley.edu (K.T. Berry), coleen@bradley.edu (C. Troutman).