The essence of the Statement of cash flows required by FASB's Statement of financial accounting standards No. 95 in 1987 is the cash basis statement of changes in a financial position, because it must show the reconciliation between net income and CFO (Cash flow from
operations) in the main body or in the footnote of the statement. The year 1987 when the new basic financial statement appeared was the starting point from which the effort should be made to formulate new conceptual framework of financial accounting that accommodates three basic financial statements: the Balance sheet, Income statement, and the Statement of cash flows. However, little argument has been aroused toward this direction in the U. S. It is mainly because the traditional and conventional double entry bookkeeping system that is designed to prepare only the Balance sheet and the Income statements are deeply rooted to the conventional
accounting philosophy. This system can be called "two dimensional accounting system", one dimension for the Balance sheet and another dimension for the Income statement. What we need now is to construct an accounting system that can
produce all three basic financial statement at the same time. Such a system can be called "three dimensional double entry accounting system", and will be demonstrated in this paper. This 3 D accounting system can provide underlying basis for the Statement of cash flows as the basic
financial statement, in terms of the system of accounts as well as the conceptual structure.