Professional Documents
Culture Documents
Cash Flow Statement: by Yashoda Tard From Semester-1
Cash Flow Statement: by Yashoda Tard From Semester-1
statement
BY YASHODA TARD
FROM
B.COM(HONS)
Content
s
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 enterinto 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 activitiesdisplayed on the statement of cash flows.
Adjustment question for cash flow
statement