CASH FLOW STATEMENTS
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What is a Cash Flow Statement?
A Cash Flow Statement is a financial statement that shows the inflows and outflows of cash and cash equivalents during a specific accounting period, classified under operating, investing, and financing activities.
What is the primary objective of preparing a Cash Flow Statement?
To show sources and uses of cash during a period.
Which accounting standard governs Cash Flow Statements in India?
AS-3 (Accounting Standard 3) issued by the Institute of Chartered Accountants of India (ICAI) governs Cash Flow Statements; for companies under Ind AS, Ind AS 7 applies.
Which Indian Accounting Standard specifically deals with Cash Flow Statements?
AS-3 (Accounting Standard 3) deals with Cash Flow Statements.
What are the three main activities classified in a Cash Flow Statement?
The three main activities are Operating Activities (core business operations), Investing Activities (acquisition/disposal of long-term assets), and Financing Activities (changes in equity and borrowings).
What is the equivalent of AS-3 under Ind AS framework?
Ind AS 7 is the equivalent of AS-3 under Ind AS.
What is the Direct Method of preparing Cash Flow Statements?
The Direct Method discloses major classes of gross cash receipts and gross cash payments from operating activities, showing actual cash received from customers and paid to suppliers and employees.
How are short-term highly liquid investments classified in a Cash Flow Statement?
They are classified as cash equivalents if maturity is three months or less.
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