Cash Flow & Fund 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 direct method of presenting cash flows from operating activities?
It shows gross cash receipts and payments from operations directly.
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 the preparation and presentation of Cash Flow Statements.
What does an increase in creditors indicate in a Cash Flow Statement under Indirect Method?
It indicates a positive adjustment, increasing cash flow from operations.
What are the three activities under which cash flows are classified in AS-3?
Cash flows are classified into three activities: Operating Activities (core business operations), Investing Activities (acquisition/disposal of long-term assets), and Financing Activities (changes in capital structure and borrowings).
How is amortization of intangible assets treated in the Cash Flow Statement?
It is added back to net profit as a non-cash charge under Indirect Method.
What is a Fund Flow Statement?
A Fund Flow Statement shows the movement of funds (working capital) between two balance sheet dates, explaining the sources from which funds were obtained and the uses to which they were applied.
What is the treatment of cash received from sale of investments in a Cash Flow Statement?
It is classified as cash inflow under investing activities.
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