Welcome to 9-Zone an Exclusive place for Students & experts of Finance/C.Law like CA'S CWA'S CS'S MBA'S M.COM'S etc.
Menu holder.
Custom Search

AS – 3




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.


An enterprise should prepare a cash flow statement and present the same along with the financial statements for each period.



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.

Examples of investing activities:

1. Cash payments to acquire fixed assets.

2. Cash receipts from disposal of fixed assets

3. Interest & dividend received

Examples of financing activities:

1. Proceeds from issue of share capital.

2. Proceeds from long term borrowings.

3. Repayment of long term borrowings.


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.





9-zone blog on news and updates.

Updates and latest news

Bookmark our RSS


Join our

Join Our Orkut Community

Follow us on Twitter

Follow us on Twitter