Accounting Standard 3: Cash Flow Statements

• Prepare and present cash flow statement for each period for which financial statements
are prepared.

• A cash flow statement should report cash flows during the period classified by operating,
investing and financial activities.

• Operating activities are the principal revenue producing activities of the enterprise other
than investing or financing activities.

• Investing activities are the acquisition and disposal of long term assets and other
investments not included in cash equivalents.

• Financing activities are activities that result in changes in the size and composition of
the owner’s capital and borrowings of the enterprise.

• A cash flow statement for operating activities should be prepared by using either the
direct method or the indirect method. For investing and financing activities cash flows
should be prepared using the direct method.

• Cash flows arising from transactions in a foreign currency should be recorded in

enterprise’s reporting currency by applying the exchange rate at the date of the cash flow.

• Investing and financing transactions that do not require the use of cash and cash
equivalent balances should be excluded.

• An enterprise should disclose the components of cash and cash equivalents together
with reconciliation of amounts as disclosed to amounts reported in the balance sheet.

• An enterprise should disclose together with a commentary by the management the

amount of significant cash and cash equivalent balances held by it that are not available
for use.