Ch 7 CFS lklkjljkkkjkjljljkjkjklkjkljkllllljljlkjlkjkljkljkjkljkljkljklkjkljlljlkjkjkljjljkljkljkljlkjljljllkjljlkjljljlkjkljkljkljljkljkjkjkljlkjkljkljlkjjljljljkjlljlkjkljlkjkljkljkljkljkljljkljkljlkjkljkjljkljlkjkljkljkljkljkljlk

8/13/2019 Ch 7 CFS lklkjljkkkjkjljljkjkjklkjkljkllllljljlkjlkjkljkljkjkljkljkljklkjkljlljlkjkjkljjljkljkljkljlkjljljllkjljlkjljljlkjkljkljkljljkljkjkjkljlkjkljkljlkjjljljljkjlljlkjkljlkjkljkljkljkljkljljkljkljlkjkljkjljkljlkjkljkljkljkljkljlk

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CASH

FLOWSTATEMENT



CASH FLOW STATEMENT

Cash flow statement is a statement whichdescribes the inflows (sources) and outflows(uses) of cash and cash equivalents in anenterprise during a specified period of time.

It enumerates net effects of the variousbusiness transactions on cash and itsequivalents and takes into account receiptsand disbursement of cash.

A cash flow statement summarises thecauses of changes in cash position of abusiness enterprise between dates of twobalance sheets.



Cash comprises cash on hand and demanddeposits with banks.

Cash equivalents are short term, highly liquid

investments that are readily convertible intoknown amounts of cash without any loss.

Cash flows are inflows and outflows of cash andcash equivalents. Flow of cash is said to havetaken place when any transaction makeschanges in the amount of cash and cashequivalents available before happening of thetransaction. If the effect of transaction results in

the increase of cash and its equivalents, it iscalled an inflow (source) and if it results in thedecrease of total cash, it is known as outflow(use) of cash.



CLASSIFICATION OF CASH FLOWS 1. Cash flows from operating activities.

2. Cash flows from investing activities.

3. Cash flows from financing activities



Examples of cash flows from operating

activities Cash receipts from the sale of goods &

rendering of services;

Cash receipts from royalties, fees,

commission, and other revenue;

Cash payments to suppliers of goods &

services;

Cash payment to and on behalf ofemployees;



Examples of cash flows arising from

operating activities Cash receipts and cash payments of an

insurance enterprise for premiums andclaims, annuities and other policy benefits;

Cash payments or refunds of income taxesunless they can be specifically identified withfinancing and investing activities; and

Cash receipts and payments relating to

futures contracts, forward contracts, optioncontracts, and swap contracts when thecontracts are held for dealing or tradingpurposes.




investing activities Cash

–payments to acquire fixed assets.These

payments include those relating to capitalized

research & development costs and self

constructed fixed assets.

Cash receipts from disposal of fixed assets

Cash payments to acquire share, warrants, or

debit instruments of other enterprises and

interests in joint ventures.

Cash receipts from disposal of shares,

warrants, or debt instruments of other

enterprises and interests in joint venture.




investing activities Cash advances and loans made to third parties.

Cash receipts from the repayment of advances

and loans made to third parties.

Cash payments for futures contracts, forwardcontracts, option contracts, and swap contracts

etc.

Cash receipts from futures contracts, forward

contracts, option contracts, and swap contracts

except when the contracts are held for dealing

or trading purposes, or the receipts are

classified as financing activities.




financing activities are Cash proceeds from issuing share or other

similar instruments:

Cash proceeds from issuing debentures,loans, notes, bonds, and other short-or long-

term borrowings; and

Cash repayment of amounts borrowed such

as redemption of debentures, bonds,

preference shares.


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Cash Flow Statement (for the year ended…………)

Documents

Ch 7 CFS lklkjljkkkjkjljljkjkjklkjkljkllllljljlkjlkjkljkljkjkljkljkljklkjkljlljlkjkjkljjljkljkljkljlkjljljllkjljlkjljljlkjkljkljkljljkljkjkjkljlkjkljkljlkjjljljljkjlljlkjkljlkjkljkljkljkljkljljkljkljlkjkljkjljkljlkjkljkljkljkljkljlk