Cash flow statement

BY YASHODA TARD
FROM B.COM(HONS)
SEMESTER-1
 Contents

 Meaning
 objectives
 Types and classification
 Methods
 Format of cash flow statement
 Cash flow statement
A cash-flow statement is a statement showing inflows(receipts) and
outflows(payments) of cash during a particular period. In other
words, it is a summary of sources and applications of cash during a
particular span of time. It analyses the reasons for changes in balance
of cash between the two balance sheet dates. The term ‘cash’ here
stands for cash and cash equivalents. A cash-flow statement includes
only those items which affect cash.
A cash-flow statement can be for the past or can be projected for
a future period.
 objectives
 Measurement of cash
 Generating inflow of cash
 Classification of activities
 Prediction of future
 Assessing liquidity and solvency position
 Evaluation of future cash flows
cash flows from operating activities :
operating activities are the main revenue generating
activities of an enterprise. As such , they include cash flows
from those transactions and events which enter into the
ascertainment of net profit or loss of the enterprise .
 Cash flows from investing activities :
Investing activities include the purchase and sale of long-term
assets such as land, buildings, plant and machinery etc. not held
for resale.
These activities also include the purchase and sale of such
investments which are not included in cash equivalents. Cash
flow from investing activities discloses the expenditures incurred
for resources intended to generate future income and cash flows.
 Cash flows from financing activities :
financial activities are transactions or business transactions
or business events that affect long term liabilities and equity. In
other words financial activities are transactions with creditors or
investors used to fund either company operations or
expansions. These transactions are the third set of cash
activities displayed on the statement of cash flows.
 Adjustment question for cash flow
statement

liabilities 2005 2006 assets 2005 2006

Creditors 40000 44000 Cash 1000 7000
Mr. ram’s loan 25000 _ Debtors 30000 50000
Loan from PNB bank 40000 50000 Stock 35000 25000
capital 125000 153000 Machinery 8000 55000
Land 40000 50000
building 335000 60000
230000 247000 230000 247000
 Additional information :
1) During the year a machinery costing rs.10000( accumulated depreciation rs.5000.
2) The balance of provision for depreciation against machinery on 1st april 2005 was rs.
25000 and on 31st march 2006 rs.40000.
3) Net profit for the year 2005 & 2006 amount to be rs.45000.
prepare cash flow statement with necessary notes.
 refrences

 Wikipedia
 Google images
 Financial accounting refrence book