Accounting Cambridge A Level 9706 Financial Accounting Paper 3 Company Accounts Public Limited Company Accounts Cash Flow Statements (IAS 07) Indirect Method Operating Activities Investment Activities Financing Activities Online Classes an effective document for accounting classes specially during this covid 19 (Corona) situation Past papers and model questions short notes online support to get clarified all the doubts Contact : Wtsapp : +94779035940 Instagram : Sanjaya_Jayasundara Facebook: Accounting with Sanjaya Sir

1. Statement Cash Flows
1Accounting with Sanjaya
Statement of Cash Flows
Sanjaya Jayasundara
B.Sc.(Finance) Sp.
University of Sri Jayewardenepura,
Investment Advisor,
International School Teacher

2. Statement Cash Flows
2Accounting with Sanjaya
Content
Introduction.
Types of cash movements
Types of statement of cash flows
Important words
Examples
Past Paper Questions
Model questions.
Extra Readings
Important Slides
Summary
Syllabus according to Cambridge IAL
1 Financial Accounting (A level) – Paper 03
IAS 7 Statement of cash flows
1.1.3 Limited companies
Candidates should be able to:
• understand the nature and purpose of the financial statements of limited
companies, and the regulatory framework in which they operate
• prepare an income statement, statement of financial position and statement
of cash flows for a limited company in line with the relevant international
accounting standards
A separate tutorial will be given for Published Company accounts

3. Statement Cash Flows
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Introduction
Generation of cash is of vital importance for the short-term survival of all businesses,
while profits ensure survival in the longer term.
An income statement concentrates on the determination of profits or losses over a
period of time. A statement of financial position shows the assets and liabilities of a
business at one particular moment in time. A statement of cash flows details cash
inflows and cash outflows that have occurred during a period. The three statements
used together summarise most of the information required by the users of financial
statements.
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Only larger limited companies are required, under International Accounting Standards,
to prepare a statement of cash flows as part of their end-of-year financial statements.
They must prepare financial statements in accordance with Companies Acts 1985 and
1989 and with International Accounting Standards(IAS).
IAS 7 Statement of cash flows lays down the way that the statement must be set out.
This allows comparisons to be made with the statements of other companies.
Test your understanding:
01.‘Only larger limited companies are required to prepare a statement of cash
flows as part of their financial statements.’
Is this statement true or false?
02.‘A statement of cash flows is used to calculate profit.’
Is this statement true or false?
03.‘ A statement of cash flows will indicate whether or not the business requires
a bank overdraft in a few months’ time.’
Is this statement true or false?
What is the difference between cash and cash equivalents?
Cash
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Cash equivalents
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4. Statement Cash Flows
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Types of cash flows/movements
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01.Operating activities
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Examples:
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02.Investing activities
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Examples:
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03.Financing activities
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Examples:
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Test your understanding:
01.Which International Accounting Standard deals with statements of cash
flows?
02.Identify two uses for preparing a statement of cash flows.
03.Identify the three sections required by IAS 7 that must be shown in a
statement of cash flows.

5. Statement Cash Flows
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What is the difference between Statement of Cash Flows
Under Direct method and Indirect method?
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General Format of Statement of Cash Flows Indirect Method
Operating Activities $ $
Operating Profit (PBIT) ×××
Adjustments
Working Capital changes
Interest paid
Tax paid
Net Cash inflow/outflow from operating activities

6. Statement Cash Flows
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Past Paper Questions
October/November 2019 – Variant 32

7. Statement Cash Flows
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February/March 2019 – Variant 32

8. Statement Cash Flows
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The uses of Statement of Cash Flow Statement
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9. Statement Cash Flows
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October/November 2016 – Variant 31

10. Statement Cash Flows
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What is the purpose of statement of cash flows?
The primary purpose of the statement of cash flows is to provide information
aboutcash receipts, cash payments, and the net change in cash resulting from
the operating, investing, and financing activities of a company during the period
Revaluation of Non-current assets
A revaluation of non-current assets (NCA) changes a statement of financial
position. The NCA will increase in value, as will the equity of the company.
However, as such a revaluation merely involves ledger entries, there will be
no movement in cash. Therefore, there will be no entry in a statement of cash
flows.
Bonus issue of shares
Such transactions impact on the statement of financial position of a limited
company, but do not cause any movements in cash resources. The issue of
bonus shares is not shown in a statement of cash flows.

11. Statement Cash Flows
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Challenge Question

12. Statement Cash Flows
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It is important to remember that;
 A statement of cash flows is a historical document that is prepared after the
financial year-end. A cash-flow forecast should be more properly referred to
as a cash budget and it is a prediction or estimation of probable future cash
flows.
 Only cash flows arising from purchases and sales of non-current assets
appear under ’Investing activities’. Changes in current assets appear as
adjustments to the profit from operations.
 Non-cash transactions are book entries and do not involve movements in
cash.
All the best children…!
I wish you an enjoyable learning session...!
Sanjaya Jayasundara
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