The cash flow statement plays an important role in making decisions and planning by investors, creditors, and management. Nowadays, in preparing financial statements, the cash flow statement is considered as an important element. Statement of Cash Flow - Financial AccountingĪ cash flow statement means a statement relating to information regarding the inflow and outflow of cash. Therefore, the cash flow statement is considered an important element of the financial statement. In section – J of International Accounting Standard – 7, it is stated, a complete financial statement contains an income statement, balance sheet, retained earnings statement, cash flow statement, and accounting principles and notes to the financial statement. Thereby companies present cash and cash-equivalent items that are shown on their balance sheet. Determines the amount separately for each head and presents discloses of the same.Cash flow from financing activities and.Cash flow from investing activities and. ![]() Later, in 1992 it was published in modified forms.Ĭash flow statement means inflow and outflow of cash of a particular period which is divided into: ![]() International Accounting Standard Committee introduced the International Accounting Standard-7 on cash flow statement considering its importance. The primary objective of the cash flow statement is to help management in making a decision and making a plan by providing current information on cash inflow and outflow of any accounting period.ĭuring 1960, the cash flow statement was considered with due importance in the United States of America. Generally, a cash flow statement is prepared for a particular period or a financial year. Nowadays, in preparing financial statements, the cash flow statement is considered an important element. A cash flow statement means statements relating to information regarding the inflow and outflow of cash.
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