Which of the following items would be specifically included in the statement of cash flows constructed in compliance with AS-3 ?
Operating and non-operating cash flow information
AS-3 (Revised), Cash Flow Statements, requires an enterprise to report the cash flows of a period classified into operating, investing and financing activities. Operating activities are the principal revenue-producing activities; investing and financing activities are the other (non-operating) sources and uses of cash.
So the statement is built around operating cash flow information and non-operating (investing and financing) cash flow information; this is exactly the content AS-3 prescribes for the face of the statement.
AS-3 also says that investing and financing transactions which do not require the use of cash or cash equivalents must be excluded from the statement and disclosed elsewhere in the financial statements, because no cash moves.
Conversion of debt into equity, acquiring an asset through a lease, and purchasing a building by giving a mortgage to the seller are all such non-cash transactions, so none of them is specifically included in the statement itself.
Hence, Operating and non-operating cash flow information.
Similar Questions
For the following two statements of Assertion (A) and Reasoning (R), indicate the correct code :
Assertion (A) : Cash Flow Statement as per the financial statements as well is incapable in revealing the overall financial position of a firm.
Reasoning (R) : Cash is an important constituent of the working capital based on the recorded facts only.
Codes :
Important Questions from Cash Flow Analysis
Which of the following activities should be shown separately in the cash flow statement prepared as per Accounting Standard-3 ?
a. Cash flow from borrowing activities.
b. Cash flow from operating activities.
c. Cash flow from financing activities.
d. Cash flow from investing activities.
e. Cash flow from miscellaneous activities.
Codes :
- The balance of property at cost has been ₹ 20,000 and ₹ 17,000 in 2015 and 2016, respectively. The profit on the sale of property of ₹ 2,000 is credited to Capital Reserve Account. New property costing ₹ 5,000 was bought in 2016. Determine the sale proceeds from property.
- Which of the following is not a cash inflow ?
Cash from Operation is equal to
Match List–I with List–II :
List I
(Transaction)
List II
(Activity)
(a)
Cash payments of salaries and wages 1.
Investing (b)
Cash proceeds from issuing shares at a premium 2.
Operating (c)
Payment of income tax 3.
Financing (d)
Tax deducted at source on interest received from subsidiary company
Select the correct answer using the codes given below.
