The document discusses the components of a cash flow statement, which includes cash flows from operating activities, investing activities, and financing activities. It provides examples of cash inflows and outflows for each category. Operating activities include cash from sales and payments to suppliers and employees. Investing activities consist of cash flows for purchasing/selling long-term assets. Financing activities contain cash from issuing shares/bonds and repaying amounts borrowed. The cash flow statement assesses cash inflows and outflows over a period to evaluate financial performance and assist with budget planning.

1. COMPONENTS OF CASH FLOW STATEMENT

2. MEANING OF CASH FLOWS STATEMENT:
• A summary of the actual or anticipated incomings and outgoings of
cash in a firm over an accounting period (month, quarter, year).
It answers the questions:
Where the money came (will come) from?
Where it went (will go)?
Cash flow statements assess the amount, timing, and predictability of
cash-inflows and cash-outflows, and are used as the basis for
budgeting and business-planning.

3. COMPONENTS OF CASH FLOW STATEMENT
• Investing Activities
• Operating Activities
• Financing Activities

4. CASH FLOWFROM INVESTING ACTIVITIES:
Investing activities include the acquisition and disposal of long-term assets and
other investments not included in cash equivalents. The separate disclosure of cash
flows arising from investing activities is important.
Examples are:
 Cash payments to acquire fixed assets (including intangibles)
 Cash receipts from disposal of fixed assets (including intangibles)
 Cash payments to acquire and cash receipts from disposal of shares, warrants or debt
instruments of other enterprises and interests in joint ventures.
 Cash advances and loans made to 3rd parties
 Cash payments and receipts for future contracts, forward contracts, option contracts
and swap contracts except when the contracts are held for dealing or trading
purposes, or the payments are classified as financing activities

5. CASH FLOW FORM OPERATING ACTIVITIES:
Operating activities are the principle revenue producing activities of the enterprise and
other activities that are not investing and financing activities. Hence, these are the results
of those transactions and events that determines the net profit or loss.
Examples are:
a. Cash receipts from the sale of goods and the rendering of services
b. Cash receipts from royalties, fees, commissions and other revenues
c. Cash payments to suppliers of goods and services
d. Cash payments to and on behalf of employees
e. Cash receipts and cash payments of an insurance enterprise for premiums and claims,
annuities and other policy benefits
f. Cash payments or refunds of income taxes unless they can be specifically identified with
financing and investing activities
g. Cash receipts and payments relating to future contracts, forward contracts, option
contracts and swap contracts when the contracts are held for dealing or trading purposes.

6. CASH FLOW FROMFINANCING ACTIVITIES:
The separate disclosure of cash flows arising from financing activities is
important because it is useful in predicting claims of future cash flows by providers
of funds (both capital and loan)to the enterprise. Financing activities are activities
that result in changes in the size and composition of the owners capital (including
preference share capital in the case of a company) and borrowings of the enterprise.
Examples are:
 Cash proceeds from issuing shares or other similar instruments
 Cash proceeds from issuing debentures, loans, notes, bonds and other short or
long term borrowings, and
 Cash repayments of amounts borrowed such as redemption of dentures, bonds,
preference shares.

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