Cashflow statement

Others 485 views 5 replies

CA STUDENT

Job

73 Points Joined June 2013

Hi Can any one explain me for the following

In Cashflow statement ,in many documents,books, authors, we find that,the order is 1. Operating Activities 2. Investing Activities 3. Financing Activities.

My Query is that the above order is Mandatory? if so is there any proper explanation for that?

Suppose, cannot i write 1. Opearating 2. Financing 3. Investing ? Our objective at the end we have to arrive Cash and Cash Equivalents at the end of the year, and this value should match with Balance sheet Assets side the given date item and line item value i.e. cash and cash equivalents value. as we know the purpose and concept but the order gives any good and use ful meaning as we have to follow like this only?

It would be great if any one make me clear for my Query

Replies (5)

Vandana J Doshi

Practising Company Secretary

12562 Points Joined May 2011

Hi,

the format for the same is specified in the relevant accounting standard....i.e. AS 3

So follow that.....

Mayank Mall

CA-Final

316 Points Joined July 2011

Well I believe out of my own logic that the order is taken from the business cycle. You generate money through the operating cycle, you fulfill business needs of assets and investments securing the future and ultimately you distribute what's left of it.

So from the point of view of better presentation and uniformity of statement, such order should be maintained however if you change the order the answer would still be correct, only the presentation part will suffer as the end-user will be confused if he/she doesn't read the order properly which could be avoided otherwise.

CA STUDENT

Job

73 Points Joined June 2013

Originally posted by : Vandana J Doshi

Hi,

the format for the same is specified in the relevant accounting standard....i.e. AS 3

So follow that.....

Format i know but there should be a order and procedure which explains in a complete meaning .still i am waiting for good answer with good explanantion

CA STUDENT

Job

73 Points Joined June 2013

Hi Vandana j doshi,

At the outset, Thanks for guiding towards Accounting Standard

Just FYI, When AS -7 Format come in to picture,unless until there is a specific criteria or procedure or underlying meaning then only AS or Formatting will come in to picture. But my Question is directing in a broad sense. Please update me if possible and if you got the answer for that.

CA STUDENT

Job

73 Points Joined June 2013

Hi all, thanks for your comments posted and even me also collected some information please read below!

i got information after discussing with many senior people here it goes thier exlanation.

1.Even Accounting standard also start giving details after analysing many economic and buisness transactions.

2. All public listed companies has to prepare and present as per the above order only. if it is not public listed company, no one bothers about its preparation and presentation of cash flow statement and more over cash flow statement has come in to picture keeping in mind about whether it is public listed or non listed criteria.