A Cash Flow Statement shows where cash came from and where it went during the year, under AS-3 (Revised).
Cash and cash equivalents
Cash in hand, demand deposits with banks, and short-term highly liquid investments readily convertible into a known amount of cash, with an insignificant risk of change in value (usually maturing within three months of acquisition).
Classification
| Activity | Examples |
|---|---|
| Operating | Cash from customers, payments to suppliers and employees, income tax paid |
| Investing | Purchase and sale of fixed assets and non-current investments; interest and dividend received (non-financial company) |
| Financing | Issue and redemption of shares and debentures, long-term loans, interest paid on borrowings, dividend paid |
Indirect method for operating activities
- Net profit before tax and extraordinary items.
- Add non-cash and non-operating expenses (depreciation, amortisation, loss on sale of assets, interest on borrowings); deduct non-operating incomes (profit on sale, interest and dividend received).
- Adjust for changes in current assets and current liabilities.
- Deduct income tax paid.
A full worked order is in our article Cash Flow Statement step by step.
Recorded lectures for this chapter
9 lectures (4 h 03 min) by Ronak Dugar in Class 12 Accountancy Book 3: Analysis of Financial Statements. Enrolled students watch them in the student portal.
- Class 1 - Basics, Methods of Cash Flow, Cash & Cash Equivalents, Difference between CFO--CFI--CFF.30 min
- Class 2 - WN1: NP Before Tax with Practical Questions29 min
- Class 3 - Format of Cash Flow Statement as per AS-3 revised of Companies Act 2013.34 min
- Class 4 - Practical Questions of Cash Flow from Operating Activities (CFO)39 min
- Class 5 - Practical Questions of Cash Flow from Investing Activities (CFI)32 min
- Class 6 - Practical Questions of Cash Flow from Financing Activities (CFF)18 min
- Class 7 - Provision for Tax Cases, Comprehensive Question without adjustment.21 min
- Class 8 - Comprehensive Question with adjustments15 min
- Class 9 - Comprehensive Question with adjustments21 min
Learn this chapter with Ronak Sir
Classroom batches in Sector 9, Faridabad and recorded lectures online. Book a free demo class or call +91 83685 45620.