IAS 1 – Presentation of Financial Statements requires the following components for a complete set of financial statements:
There are three ways of classifying cash flows, which we look at in this article.
Cash Flow Classifications
Cash flows should be classified under the following headings:
During your studies or career, you may be asked to prepare a statement of cash flows and then comment on the statement and the entity’s cash position.
In this article we take a look at the benefits and limitations of Cash Flow Statements.
Cash flow statements – benefits
Cash flow information provided in the statement of cash flows can be beneficial, for example:
The third section of a statement of cash flows is for financing activities.
In this article, we’re looking at the second section of a statement of cash flows which is for investing activities.
Operating activities are those activities linked to provision of goods or services by the entity, so the normal trading activities of the entity.
In this article, we look at the Indirect Method of preparing a statement of cash flows.
When the indirect method of presenting the statement of cash flows is used, the net profit or loss for the period is adjusted for the following items:
Operating Activities – Direct method
When the direct method of presenting the statement of cash flows is used, the major classes or receipts and payments are listed out, and the final balance of these gives us the net cash flows from operating activities.
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