Cash Flow from Financing activity Archives - RBL Academy

AS- 3 Cash Flow Statement • A statement that shows flow of cash and cash equivalents of a particular period of time. It is a summary of receipts and payment of cash for a particular period of time. It also explains reasons for the changes in cash position of the firm. • Cash flow statement is generally prepared for one financial year (April to March). • Cash means cash in hand and cash at bank /demand deposits with banks. • Cash equivalent is a highly liquid investment whose maturity period is three months or less. It is subject to a minimal risk of a change in value. • Cash equivalent includes Marketable securities / short term investment, short term deposits in banks, cheques and drafts on hand, certificate of deposits. Note - Until and unless, question specifies, short term investment is considered as marketable securities. Otherwise it will be taken as current asset while solving question. • Cash Flow means inflow and outflow of cash and cash equivalents. • Inflow – Any transaction that increases cash and cash equivalent of a company Example –rent received cash revenue from operations, sale of investment etc. • Outflow – any transaction that decrease inflow and outflow of a company. Example – repayment of loans and advances, payment to creditors, operating expenses paid etc. AS -3 requires preparation of cash flow statement under three heads: • Cash Flow from Operating Activity It includes cash flows from the principal revenue generation activities of an organisation. • Cash flow from investing Activity It includes cash flows from sale and purchase of noncurrent assets, investments (which are not included in cash equivalent) and earning generated on those investments. • Cash flow from financing Activity It includes cash flow resulting out of change in shareholders’ fund and noncurrent liability of an organisation (raising and repaying finance of an organisation). Note - We will see the examples of all three activities in CFS format.*

Class 12 Accounts

AS- 3 Cash Flow Statement

AS- 3 Cash Flow Statement notes, CFS format, Cash Flow from Operating, Financing & Investing Activity, Change in Working Capital, Cash & Cash equivalent & CFS Specimen

By admin, 2 yearsJune 23, 2022 ago