3)Cash Reconciliation -We are concerned with cash flows. Accrual-based accounting is not a reflection of cash inflows and outflows. We can, however, use accounting statements to extract the cash element of the accounting entries. We start with the Income Statement and use changes in Balance Sheet accounts to adjust for cash flows. Once we have calculated operating cash flow, we then consider other long-term sources changes on the Balance Sheet that affected cashsuch as acquisition/sale of fixed assets, sale/repurchase of common stock, dividend payments, issuance/repayment of debt, etc. When combined, we can reconcile the change in cash from $236,000 to $276,000