Cash Flow and Fund Flow
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Accounting and Financial Management for Bankers — JAIIB.
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Free sample — 8 of 65 rapid-fire Q&A cards.
What is the primary purpose of a Cash Flow Statement?
A Cash Flow Statement shows the actual inflows and outflows of cash and cash equivalents during an accounting period, helping assess the liquidity and solvency of a business.
What is the indirect method of presenting operating cash flows?
Net profit adjusted for non-cash items and working capital changes.
Under which accounting standard is the Cash Flow Statement governed in India?
The Cash Flow Statement is governed by AS-3 (Accounting Standard 3) issued by ICAI, which is mandatory for listed companies and certain other enterprises.
What is the direct method of presenting operating cash flows?
Showing actual cash receipts and payments from operating activities directly.
What are the three main activities classified in a Cash Flow Statement?
Cash flows are classified into Operating Activities, Investing Activities, and Financing Activities as per AS-3.
What is the net increase or decrease in cash and cash equivalents?
The sum of cash flows from operating, investing, and financing activities.
How are cash flows from operating activities defined in a Cash Flow Statement?
Operating activities are the principal revenue-producing activities of an enterprise and include cash receipts from sales of goods, rendering services, and related payments like wages and taxes.
How is depreciation treated in the indirect method of cash flow?
Added back to net profit as it is a non-cash charge.
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