cash flow statement can be defined as a statement showing the changes in cash position from the beginning to the end of the year CFS summarises the sources from which cash was received and the cash payments made during the year explaining the changes in cash position


Cash Flow Statement

FFS CFS Shows Useful cash position working capital position for long term analysis short term analysis Statement There of changes in working capital is prepared not prepared is no legal requirement prepare CFS legal requirement to to prepare according to AS-3 FFS Distinction between FFS and CFS 3/13/13 .

Useful in cash planning Provides information on cash generated from operating. financing and investing activities separately on payment of dividends can be taken easily explains the reasons for surplus or shortage of cash Decisions CFS Objectives of CFS 3/13/13 .

Compulsory The If companies if preparation of CFS by the securities are listed in the stock exchange the turnover for the accounting period exceeds 50 crores Accounting Standard-3 3/13/13 .

salaries Classification of Cash Flows 3/13/13 . fees.Operating Activities: Revenue activities of the organisation which results in net profit or net loss Sale of goods Receipts from royalties. commission Cash payment to the suppliers Cash payment towards wages.

Investing activities: Cash flow arising from the acquisition and disposal of long term assets is known as cash from investing activities Cash received by selling fixed assets Cash paid to acquire fixed assets Cash paid for repayment of loans 3/13/13 .

Financing Cash activities: flow arising from changes in the size and composition of owner’s capital and borrowings is known as cash from financing activities Cash received from issue of shares Cash received from loans raised Cash paid for redemption of debentures 3/13/13 .

3/13/13 from operating activities .Net profit for the year Add non cash and non operating expenses Depreciation Goodwill written off Preliminary expenses written off Share discount written off Loss on sale Provision for taxation Calculation of cash contd.

Add Less Increase in current liabilities Decrease in current assets Increase in current assets Decrease in current liabilities Less Income tax paid ----------Cash from operating activities 3/13/13 .

dividend. etc. Adjustment for changes in CA and CL Income tax paid Cash flow from extraordinary items Cash from operating activities xxx Proforma of Cash Flow Statement -------------- 3/13/13 .interest.Cash flows from operating activities: Net profit before tax and extraordinary items Adjustment for Dep.

Cash flows from investing activities Purchase of fixed assets Sale of fixed assets Interest and dividend received xxx cash from investing activities ----------------- Proforma of Cash Flow Statement 3/13/13 .

Cash flow from financing activities: Issue of shares and debentures Long term borrowings Repayment of long term borrowings Interest paid Dividend paid xxxx cash from financing activities Proforma of Cash Flow ------------- Statement 3/13/13 .

Cash and bank balance at the xxx ---------------xxx beginning of the period Cash and bank balances at the end xxx Proforma of Cash Flow Statement 3/13/13 .

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