Cost Accounting

Cash Flow Statement.

Kaizad Jokhi-1

Akash Nishar VenugopalJokhi Kaizad Roa

Sachin Nambiar-3 Suraj Varma Samidh Bhagwat Akash Nishar-4 Venugopal Rao

Sachin Nambiar Suraj bhagwat Samidh Varma

Meaning
Cash the statement summarizes It showsflowreceipts of cash from various sources and the changes in the amount of the payment of cash for various purposes during a cash for a particular period. particular period.

NEED FOR CASH FLOW.

This usual balance sheet only shows the cash balances The drawback is overcome by preparing cash flow statement. It shows the does not show the details of on a particular date. It details of cash inflows and cash received during the year and cash paid during the outflows during the year. year.

What is the Through CFS cash the amount of I know cash received and paid received this during this year. year?????

Need for cash Flow

The cash profit forms the main source of cash Suchusual profit and loss account shows the book profit earned by the flow statement. inflow shown in cash concern. This is not the cash profit earned by the concern. It has to be adjusted for non-cash expenses to arrive at the cash profits earned by a concern. CFS is showing This profit profit the cash and loss account is not earned by my showing the cash firm. profit earned by the firm.

ASPECTS of CFS

Two aspects of CFS

Cash

Flow

CASH
It includes cash on hand and demand deposits shows the receipts and payments by way of with thechequesThus cash includes bank cash or banks. or short term investment. balance(saving and current).

FLOW
There is a flow of cash when a transaction changes( increases or decreases) the amount of cash. It means A contra transaction(Cash and bank) is not treated as a cash flow. inflows and outflows of cash. The difference between both is know as het cash flow. It can be surplus or negative.

Classification of cash flows.

For the purpose of reporting, cash flows are not reported like fund flows under sources of funds. Cash flows should be classified into those arising out of Operating activity Investing activity Financial activity It shows the summary of cash flows of these activities.

Classification

 Meaning An operating activities is a principal revenueproducing activity of an enterprise. Such activities determine the net profits or loss of a concern. Such activities refer to the operations of purchase , sale, etc. Sales generate cash, purchases use up the cash. Net profits increase in cash. Net increase in cash from these activitues is the main source of cash inflow.

Cash flows from operating activity.

 Inflows Outflows

Cash flow from operating activities

Inflow
Inflows are shown under following headCash receipt from sale of goods Cash receipts from rendering services Cash receipts from royalties , fees, commission , etc. Refund of income-tax.

Outflow
Outflows are shown under following head Cash payment to suppliers for goods and services(purchases and expenses). Cash payments to employees Cash payment of income-taxes.

 Meaning Investing activities are defined as the acquisition and disposal of long term assets and investments. Acquisition of fixed asset, long term investment reduce the cash and indicate cash outflow. Selling of fixed assets(sale) increase the cash inflow.

Cash flows from investing activities.

 Inflows Outflows

Cash flow from investment activities

Inflows
Inflows are shown under following headsCash receipt from sale of fixed assets or intangible assets. Cash receipt from sale of investment. Cash received from repayments of advances or loans made to outsiders.

Outflow
Outflows are shown under following headsCash payment to purchase fixed assets. Cash payment to acquire intangible assets Cash advances and loans made to outsiders. Cash payments for purchase of investments.

FINANCIAL ACTIVITIES

Financial activities are defined as the activities which result in change in the owners capital and borrowings.

Inflows

Outflows

Inflow
Inflows are shown under following heads Cash received from issue of shares. Cash received from issue of debentures ,loans , bonds and other long term borrowing.

Outflow
Outflows are shown under following heads

Redemption of preferenceborrowed. Repayment of amounts shares , etc.

Importance of cash flow.

Advantages of cash flow

Income assurance Ensures timely payment Return ratio Keeps out of debt Saves unnecessary expenditure. Timely investments.