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AS –
3 CASH FLOW STATEMENT
Objective: Information
about the cash flows of an enterprise is useful in providing
users of financial statements with a basis to assess the ability
of the enterprise to generate cash and cash equivalents and
needs of the company to use those cash flows. So, to provide
information about the historical changes in cash and cash
equivalents of an enterprise, Company needs a cash flow
statement. Classification of cash flows into operating,
investing and financing activities.
Scope: An
enterprise should prepare a cash flow statement and present the
same along with the financial statements for each period.
Definitions:
a. Cash
comprises cash on hand and demand deposits with banks.
b. Cash
equivalents are short
term, highly liquid investments that are readily
convertible into known amounts of cash.
c. Cash
flows are inflows and
outflows of cash and cash equivalents Examples of
operating activities:
1.
Cash receipts from customers, royalties, fees, commission, and
other revenue.
2.
Cash payments to suppliers for goods and services.
3.
Cash payments to and on behalf of employees.
Presentation and disclosure requirements: The cash
flow statement should report: Cash flows
during the period, those cash flows have to be classified
activity-wise into operating, investing and financing
activities. |
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