CASH FLOW STATEMENT
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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 actual cash inflows and outflows during a period.
Which accounting standard governs the preparation of Cash Flow Statements in India?
AS 3 (Accounting Standard 3) issued by the Institute of Chartered Accountants of India (ICAI) governs the preparation of Cash Flow Statements in India.
Under which accounting standard is Cash Flow Statement prepared in India?
AS 3 – Cash Flow Statements issued by ICAI.
What are the three main categories of activities in a Cash Flow Statement?
The three main categories are Operating Activities (core business operations), Investing Activities (acquisition/disposal of long-term assets), and Financing Activities (changes in equity and borrowings).
Which companies are exempted from preparing Cash Flow Statement under AS 3?
Small and medium-sized enterprises (SMEs) may be exempted.
What does 'Operating Activities' refer to in a Cash Flow Statement?
Operating Activities refer to the principal revenue-producing activities of the enterprise and other activities that are not investing or financing activities, such as cash receipts from sale of goods and cash payments to suppliers.
What is the difference between cash flow and profit?
Cash flow tracks actual cash; profit includes non-cash accruals.
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