AS 3 Cash Flow Statements
- A mandatory for Level 1 enterprises from accounting period commencing on or after April 2001.
- Not a mandate but encouraged for Level II and Level III Non-corporate entities and Level II corporate Entities.
Exemption from preparing Cash Flow Statements
Cash and Cash equivalent:
- Cash-It comprises cash on hand and demand deposits with banks.
- Cash equivalents-They are short term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.
What are Cash Flows?
Cash flows are the inflows and outflows of cash and cash equivalents.
Presentation of Cash Flow Statement
Cash Flow depends on the the business and other factors of the enterprises.
Cash Flow is classified into:
Operating Activities
Investing Activities
Financing Activity
Disclosure
Para 45 requires enterprise to disclose the amount of significant cash or cash equivalent held by it but not available for use.
Para 47 requires to disclose:
(i) The amount of undrawn facilities that may be available for future operating activities and to settle capital commitments.
(ii) The aggregate cash flow required for maintaining operating activities.
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