Cashflow statement

This query is : Resolved

Share Report Follow Query Ask a Query

Jinesh Moorthi.N

Jinesh Moorthi.N (Querist)
Follow

12 July 2012 why an expense which comes under extraordinary items is added and deducted in operating activity ???

Hitendra Jain

Hitendra Jain (Expert)
Follow

12 July 2012 Para 3 of Accounting standard 3 is reads as follow:

A cash flow statement, when used in conjunction with the other financial
statements, provides information that enables users to evaluate the changes
in net assets of an enterprise, its financial structure (including its liquidity and solvency) and its ability to affect the amounts and timing of cash flows
in order to adapt to changing circumstances and opportunities.

Operating activities are the principal revenue-producing activities of the
enterprise and other activities that are not investing or financing activities.

Para 29 of the accounting standard reveals that:

The cash flows associated with extraordinary items are disclosed
separately as arising from operating, investing or financing activities in the
cash flow statement, to enable users to understand their nature and effect on
the present and future cash flows of the enterprise. These disclosures are in
addition to the separate disclosures of the nature and amount of extraordinary
items required by Accounting Standard (AS) 5, Net Profit or Loss for the
Period, Prior Period Items and Changes in Accounting Policies.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now