Cash flow statement reports cash receipts and payments classified according to theentities major activities i.e.
1. Operating activities.2. Investing activities.3. Financing activities.
It is prepared in line with stipulations given under AS-3
Cash comprises cash on hand and demand deposits with banks.
Cash equivalent are short term, highly liquid investment that can be readilyconverted into cash.
Cash flows are cash inflow and outflow of cash and its equivalents.
Special attention or treatment is required for foreign currency cash flows, extraordinary items [e.g. bad debt recovered etc.],taxes and dividends.