r ~VSMART

-~-
~ACADEMY
r,t os1 Rl! Un\ Upda t es f
IJ':,;T .. J'!;.( 1;·.:.L;
( Pag e I)
0 Applicability
0 Important :\leanings Q \.lcthods of Prcparin~ Cas h
0
Flo\\ from Op. Acth itics
C F S to be Prep ared by
a ll C ompanies Cas h & C ash (1) Foreign Currency Cash Flows :-
O perating Financing Investin g Direct Indirect
Eq uivalents 4 Must be recorded in
1 Activi.ties A ctivities
+
Activi ti.e s M ethod Method
Functional Currency
Except:- Short Term Readily Insignificant
+
Principal Activities Related +
Acquisition & Disposal
+
Major class of
FC Amt. X Ex. Rate on date of Cash Flows
(Ex. Gains/Losses are not Cash Flows)
a) On e P e r s o n Co. ( OPC) Highly Convertible Risk of Revenue to Capitals &
Liqttid of Long Term Assets & Receipts & Payments ('We may take '.Veighted Avg. Rate for a period also)
b) S m a ll C o . to Known Change in Producing Borrowings Other Investments not a .r e directly taken
c) Dorm a n t Co. Investments Amt. of Cash Value activities of (Change in Size & (2) Companies having Fina n cial Activities
Included in Cash into Consideration
[ an enterprise
...
Composition of Eq uivalents
+ a s Main activity then :-
+
Equity & Debt.) Dividend Received &
• Investments Must b e
+ Examples:-
• Sale of G oods/
E xampll :-
• I ss u e/ B u y Bac k
Examples:-
• P urch ase/S a le
Identify a ll c a s h
C ollectio ns &
Payment s Rela t ed
Interest Paid/Received
shall be cov ered under Operating Activity
easily Convertible into Cash Services o f Shares/ o f F i.xcd Assets
• Fees/ Roya lties/ to Opera ting
• Has low level of Risk Securities • Investment i n (3) Taxes on Income :- Must be reported
C omm ission A c tivities
in Changes in Market Value • R ed e mption of Secu rities/Shares under Operating Activity except if it could be
• Paid t o Su ppliers D e b e ntures or • I nco me f rom a b ove specifically related to Investing/ Financing &
• Generally, lnvst. having short o f Goods/ Services Bonds Shares/Se curitie s when it is practicable to Idenitify
Maturity of 3 months or le ss • P a ym en t t o • I n t eres t p a id • Div id end I n c omes E x ample : - Capital Gain on sale of Asset
are Cash & Cash Equivalents. E~ploye es o n B orro "vin g s • L oans & Advanc es to shall be transferred to Investing Act.
• B ank L o a n s Othe r Parties & Repayments
• D ividend P ai d • Derivative C o n tra cts (4) Acquisitions/Disposal of Business
Units/Subsidiaries :-
1 Start either with
NPBT(or)
2 Eliminate Non Cash
Items
3 Eliminate Non
Operating Items -:
4 Working Capital
changes adjustments
5 Tax Paid shall be
deducted at Last
+
Must be shown as Investing
•
Activities Separately
NPAT(or)
Retained Profits + • Interest Exp. (Fin.)
• Interest Income (Invst.)
under
Operating Act.
•
Provision for Tax (if starte d (5) Cash Flows from Investing & Financing Act.
ain / Loss on Sale if CA i Dedu ct
from Retained Profit or NPAT) Shall always be Reported Gross i.e. No Netting Off
transferred to P&L CA 1 A dd
Retained Profits = • Dividend Payab le ( if started
from Retained Pro fits) CL i Add
Closg Rese rves (No need to Eliminate (6) AcqJDisposal of Sursidiaries or Other Businesses
(-)Openg Reserves • Depreciation (always)
Gains/Lo sses if directly CL 1 D ed u ct
• Transfer to Reserves Like GR
(if started from Retained p r ofit s)
tra n sferred t o
Cash Flows on obtaining &
i i
Cash Flows on Cha nge in
Cap. Reserves)
• Revaluation loss or FA losing Control of Subs/ Ownership Interest in
Transfer to P&L (AS- 10) Other Business shall be a subsidiary w here control is
• Prem. on redemption of Dehn/ classified as Investing A cL not lost is classified a s
Pref. Share (if started from Financing A ct. (Unless Sub. is
held b y Investing Entity)
l
Retained Profit)
....11111
 ., Continued to next
-
@VSNIART
Vsmacl Acaoemy page gcouo
'J~ . , CA.:J":ai.C:~ha:
~- wi1h th o Authors Pr,ntmg ;:,,n d Publl,;h,ng nghts w,th tho Auttoo r s

, ~ -"A c,,.
(Page 2)
Net Cash lnllow
means Cash Generated e If nothing is specified about
Cash Sales & Cash Purchases
e To Calculate Tax Pa~ ment,
"c should IH·cparc folio\\ ing A /c 0
Tax Paid shall be sho\\ 11 under
Cash Flow from Operating
Acti\'ities after all Ad,justments
0 If Debentures arc sho\\n in BS
\\ilh % of Interest is also gi\·en
e,·en if nothing is mentioned
then we would always about interest then also \\C
& assume the Total Sales &
(Sabsc Last me likhna hai)
ha,e to make adjustment
Net Cash Outflow Purchases in Credit Onl ·. of Interest.
means Cash Use_d
TAX.Ale
To Opening Balance of Advance Tax By Opening Balance of Provision for Tax
To Cash Payment of Tax By Tax Provision made in CY tbru P&L
To Closing Provision for Tax By Closing Bal. of Advance Tax
__J
6 T lf Dcbenllll"C or Pref. Shares ai·e
redeemed during the year
such premium must
••@IMH•
+ -- - i
· For R evenue E xpenses
have been written off from For C a pital Projects
P&L after Tax (as appropriation), Operating ~~tivities
Financing Activities
then in such case Premium shall be If such grant is amortised in P&L
added back under Operating Then less back under
Activities as elimination if solution Operating Activities
started from lktained Earnings.
(j