Your SlideShare is downloading. ×
Cashflow
Cashflow
Cashflow
Cashflow
Cashflow
Cashflow
Cashflow
Cashflow
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Cashflow

1,266

Published on

Published in: Economy & Finance, Business
0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
1,266
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
62
Comments
0
Likes
1
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. ACCOUNTING STANDARD FOR BUSINESS ENTERPRISESCASH FLOW STATEMENTS [Revised 01/2001]INTRODUCTION1. This Standard prescribes the method of preparation of a cash flow statement and the information that should be provided in a cash flow statement.2. The objective of a cash flow statement is to provide users of accounting statements with information about the inflows and outflows of cash and cash equivalents of an enterprise in an accounting period, in order to enable users of accounting statements to understand and evaluate the ability of the enterprise to generate cash and cash equivalents and, accordingly, to forecast the future cash flows of the enterprise.DEFINITIONS3. The following terms are used in this Standard with the meanings specified: (1) Cash is cash on hand and deposits that are readily available for payment. (2) Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. (Hereinafter, the term “cash” will be used to cover both “cash” and “cash equivalents” unless otherwise used together with "cash equivalents"). (3) Cash flows are inflows and outflows of cash and cash equivalents of an enterprise.CLASSIFICATION OF CASH FLOWS4. Cash flows should be classified into the following three categories: (1) cash flows from operating activities; (2) cash flows from investing activities; and (3) cash flows from financing activitiesCASH FLOWS FROM OPERATING ACTIVITIES5. Operating activities are all transactions and events of the enterprise that are not investing or financing activities.6. The principal cash inflows from operating activities include: (1) cash receipts from the sale of goods and the rendering of services; (2) receipts of tax refunds; and (3) cash receipts relating to other operating activities.7. The principal cash outflows from operating activities include: (1) cash payments for goods acquired and services received; 1
  • 2. ACCOUNTING STANDARD FOR BUSINESS ENTERPRISESCASH FLOW STATEMENTS [Revised 01/2001] (2) payments of all types of taxes; and (3) cash payments relating to other operating activities .CASH FLOWS FROM INVESTING ACTIVITIES8. Investing activities are the acquisition and disposal of long-term assets and investments not included in cash equivalents.9. The principal cash inflows from investing activities include: (1) cash receipts from return of investments; (2) cash receipts from return on investments; (3) net cash receipts from the sale of fixed assets, intangible assets and other long-term assets; and (4) cash receipts relating to other investing activities.10. The principal cash outflows from investing activities include: (1) cash payments to acquire fixed assets, intangible assets and other long-term assets; (2) cash payments to acquire investments; and (3) cash payments relating to other investing activities.CASH FLOWS FROM FINANCING ACTIVITIES11. Financing activities are those activities that result in changes in the size and composition of the capital and borrowings of an enterprise.12. The principal cash inflows from financing activities include: (1) cash proceeds from investments by others; (2) cash receipts from borrowings; and (3) cash receipts relating to other financing activities.13. The principal cash outflows from financing activities include: (1) cash repayments of amounts borrowed; (2) cash payments for distribution of dividends or profits, or cash payment of interest expenses; and (3) cash payments relating to other financing activities. 2
  • 3. ACCOUNTING STANDARD FOR BUSINESS ENTERPRISESCASH FLOW STATEMENTS [Revised 01/2001]ACQUISITION AND DISPOSAL OF SUBSIDIARIES OR OTHER BUSINESS UNITS14. Cash flows arising from acquisitions and from disposals of subsidiaries or other business units should be classified as investing activities and presented separately.15. The aggregate amount of cash paid (or received) in connection with the acquisition (or disposal) of a subsidiary or other business unit should be presented net of cash acquired (or disposal of):16. An enterprise should disclose in the notes to the accounting statements, in aggregate, in respect of acquisitions or disposals of subsidiaries and other business units, the following information: (1) the purchase or disposal consideration; (2) the portion of the purchase or disposal consideration discharged by means of cash; (3) the amount of cash in the subsidiary or business unit acquired or disposed of; and (4) the amount of the assets and liabilities other than cash in the subsidiary and other business unit acquired or disposed of, summarised by each major category.CASH FLOWS OF FINANCIAL INSTITUTIONS AND INSURANCE ENTERPRISES17. The classification of cash flow items of financial institutions and insurance enterprises is different from that of other industries. In the preparation of a cash flow statement, when the classification of cash flow items as specified above is not applicable, items should be appropriately classified in accordance with their nature and the particular circumstances.18. The following cash receipts and payments of a financial institution should be classified as cash flows from operating activities: (1) loans made to outsiders and the repayment of the principal of such loans; (2) the acceptance of deposits and the repayment of the principal of such deposits; (3) deposits from or to other financial institutions; (4) funds borrowed from or loaned to other financial institutions; (5) interest income and interest expenses; (6) recovery of loans previously written off; (7) cash receipts or payments from securities transactions of an enterprise whose business is securities trading; (8) cash receipts from finance leases.19. For insurance enterprises, cash receipts and payments arising from insurance premiums, insurance claims, annuities and other insurance policy benefits should be classified as cash flows from operating activities. 3
  • 4. ACCOUNTING STANDARD FOR BUSINESS ENTERPRISESCASH FLOW STATEMENTS [Revised 01/2001]PREPARATION OF A CASH FLOW STATEMENT20. The cash flow statement should report cash flows of an enterprise during the current period classified by operating, investing and financing activities.21. Cash flows should generally be reported separately as gross cash inflows and outflows. However, cash receipts and payments on behalf of customers and for items in which the turnover is quick, the amounts are large, and the maturities are short, may be reported on a net basis. Cash flows arising from each of the following activities of a financial institution should be presented on a net basis: (1) short-term loans made and the repayment of the principal of such loans; (2) the acceptance and withdrawal of demand deposits; (3) the placement of deposits with and withdrawal of deposits from other financial institutions; (4) funds borrowed from or loaned to other financial institutions; (5) the acceptance of designated deposits and transfer of the funds to designated parties; and (6) sales and purchases of securities by an enterprise whose business is securities trading;22. Cash flows arising from transactions in a foreign currency and the cash flows of a foreign subsidiary should be translated at the exchange rates at the dates of the cash flows or at average rates. The effect of changes in exchange rate on cash should be regarded as a reconciling item and presented separately in the cash flow statement.23. Some extraordinary items, such as a loss from a natural disaster or an insurance claim should be classified in accordance with their nature as arising from the above cash flow categories and presented separately.24. An enterprise should report cash flows from operating activities using the direct method, whereby major classes of cash receipts and cash payments are disclosed to reflect cash flows from operating activities of the enterprise. When the direct method is used, information about cash flows from operating activities may be obtained either: (1) from the accounting records of the enterprise; or (2) by adjusting operating income, operating costs and other items in the income statement for: changes during the current period in inventories and operating receivables and payables; 4
  • 5. ACCOUNTING STANDARD FOR BUSINESS ENTERPRISESCASH FLOW STATEMENTS [Revised 01/2001] depreciation of fixed assets, amortisation of intangible assets and other non- cash items; other items for which the cash effects are investing or financing cash flows.25. An enterprise should disclose a reconciliation of net profit to cash flow from operating activities in a note to the accounting statements. The principal items used to adjust the net profit or loss primarily include: (1) provision for impairment losses of assets ; (2) depreciation of fixed assets; (3) amortisation of intangible assets; (4) amortisation of long-term prepaid expenses; (5) prepaid expenses; (6) accrued expenses; (7) gains or losses on disposal of fixed assets, intangible assets and other long-term assets; (8) losses on scrapping of fixed assets; (9) financial expenses; (10) gains or losses arising on investments; (11) deferred tax; (12) inventories; (13) operating receivables; (14) operating payables; 5
  • 6. ACCOUNTING STANDARD FOR BUSINESS ENTERPRISESCASH FLOW STATEMENTS [Revised 01/2001]INVESTING AND FINANCING ACTIVITIES THAT DO NOT INVOLVE CASH RECEIPTSOR PAYMENTS26. Significant investing and financing activities that do not affect receipts and payments of cash in the current period, but may affect the financial position or future cash flows of an enterprise, should be explained in the notes to the accounting statements. Such activities include the acquisition of assets by assuming liabilities.SUPPLEMENTARY PROVISION27. This Standard becomes operative as from 1 January 2001. 6
  • 7. ACCOUNTING STANDARD FOR BUSINESS ENTERPRISESCASH FLOW STATEMENTS [Revised 01/2001]APPENDIX : FORMAT OF CASH FLOW STATEMENT FOR REFERENCE CASH FLOW STATEMENTPrepared by: Period: Unit : Items Line No. Amount1. CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from sales of goods or rendering of services 1 Refunds of taxes 3 Other cash received relating to operating activities 8 Sub-total of cash inflows 9 Cash paid for goods and services 10 Cash paid to and on behalf of employees 12 Payments of all types of taxes 13 Cash paid relating to other operating activities 18 Sub-total of cash outflows 20 Net cash flows from operating activities 212. CASH FLOWS FROM INVESTING ACTIVITIES: Cash received from return of investments 22 Cash received from return on investments 23 Cash received relating to other investing activities 25 Sub-total of cash inflows 28 Cash paid to acquire fixed assets, intangible assets and other long-term assets 29 Cash paid to acquire investments 30 Cash paid relating to other investing activities 31 Cash paid relating to other investing activities 35 Sub-total of cash outflows 36 Net cash flows from investing activities 373. CASH FLOWS FROM FINANCING ACTIVITIES: Cash received from investments by others 38 Cash received from borrowings 40 Cash received relating to other financing activities 43 Sub-total of cash inflows 44 Cash repayments of amounts borrowed 45 Cash paid for distribution of dividends or profits and for interest expenses 46 Cash paid relating to other financing activities 52 Sub-total of cash outflows 53 Net cash flows from financing activities 544. EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH 555. NET INCREASE IN CASH AND CASH EQUIVALENTS 56 7
  • 8. ACCOUNTING STANDARD FOR BUSINESS ENTERPRISESCASH FLOW STATEMENTS [Revised 01/2001] Supplementary information Line No. Amount1. RECONCILIATION OF NET PROFIT TO CASH FLOWS FROM OPERATING ACTIVITIES Net profit 57 Add:Provision for impairment losses of assets 58 Depreciation of fixed assets 59 Amortisation of intangible assets 60 Amortisation of long term prepaid expenses 61 Decrease in prepaid expenses (or deduct: increase) 64 Increase in accrued expenses (or deduct: decrease) 65 Losses on disposal of fixed assets, intangible assets and other long-term 66 assets (or deduct: gains) 67 Losses on scrapping of fixed assets 68 Financial expenses (or deduct: income) 69 Losses arising from investments (or deduct: gains) 70 Deferred tax credit (or deduct: debit) 71 Decrease in inventories (or deduct: increase) 72 Decrease in operating receivables (or deduct: increase) 73 Increase in operating payables (or deduct: decrease) 74 Others 75 Net cash flows from operating activities2. INVESTING AND FINANCING ACTIVITIES THAT DO NOT INVOLVING CASH RECEIPTS AND PAYMENTS Conversion of debt into capital 76 Reclassify convertible bonds to be expired within one year as current liability 77 Fixed assets financed by finance leases 783. NET INCREASE IN CASH AND CASH EQUIVALENTS Cash at the end of the period 79 Less: Cash at the beginning of the period 80 Plus: Cash equivalents at the end of the period 81 Less: Cash equivalents at the beginning of the period 82 Net increase in cash and cash equivalents 83Note: An enterprise may adopt the format of cash flow statement before this revision. 8

×