Is it mandatory for newly incorporated private limited company to prepare cash flow statement eventhough the commercial activity has not been started yet?
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Cash flow statement for newly incorporated private company
Replies (1)
From FY 2014-15 onwards, cash flow statement is a compulsory part of the financial statement, except in the case of one person co., dormant co. and small co. [sec. 2(40)].
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Since the entity is newly incorporated and there is no commercial activity, it can be classified as a ‘small company’, if the paid-up share capital does not exceed Rs. 50 lakh AND turnover (as per its last P&L A/c) does not exceed Rs. 2 crore [sec. 2(85)].
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Second condition gets fulfilled by itself since it’s the first year. If the company also fulfills the first one, then it’s financial statements may not include cash flow statement.
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