Statement of cash flows with examples

1. Group Members:
Saad Shoaib
Kantesh
M.Abdullah
Nazakat Ali
Muzamil Parvaiz

2. IAS # 7

3. Introduction
 Statement of Cash Flows requires an entity
to present a statement of cash flows as an
integral part of its primary financial
statements.
 The Statement of cash flows presents the
Inflows and Outflows of cash over the
period of time

4. Scope
 Applicable to all and to be prepared as
financial statement every year with other
financial statements.

5. Objectives
 Presentation of information about the
historical changes in cash during a period
 Basis to assess ability to generate cash
 Assess timing and certainty of generation
of time

6. Presentation of Statement of Cash Flows
 Statement of cash flows shall categorize
the information relating to cash receipts
and cash payments under following
 Operating Activities
 Investing Activities
 Financing Activities

8. Operating Activities
 Are the mainly related to the revenue
producing activities of the entity
 Indicate it operations generate enough
cash to repay loans, maintain operations.
pay dividends and invest without external
sources of cash

9. Examples
 Cash paid to suppliers and employees
 Cash collection on sales of good
 Insurance payments and receipts
 Tax payments and receipts

10. Investing Activities
 The Cash flows arising from investing
activities represents the extent to which
expenditure has been made for resources
intended to generate future income and
cash flows

11. Examples
 Repayments of cash advances
 Proceeds from sale of investment
 Purchase of Property , Plant and
Equipment
 Cash Advances made to Third Parties

12. Financing Activities
 Cash flows from financing activities
include funds provided by and paid to
Owner and Third Parties

13. Examples
 Cash received on Bank borrowing
 Cash received on issue of Shares
 Payment of dividends to Shareholders
 Bank borrowing repayments.

14. Non-Cash Transaction
 Transaction that do not require cash or
cash equivalents should be excluded.
 Required information on such
transaction must be Dis - closed
elsewhere in the financial statement

15. Example
 Issue of share against asset acquired

16. Foreign Currency Cash Flows
 The cash flows shall be recorded in the
entity’s functional currency and for this
purpose.
 Exchange rate Between the Functional
currency and the Foreign currency at the
date of cash flows shall be applied to
related foreign currency amount

18. Interest and Dividends
 Interest paid and interest and dividends
received are usually classified as
operating cash flows for a financial
institution.
 Shall each be disclosed separately.

19. Taxes On Income
 The cash flows arising from taxes on
income shall be separately disclosed.
 It shall be classified as cash flows from
operating activities.

20. Methods of Recording
 Direct Method
 In-Direct Method

21. Direct Method
 The Direct method, whereby major
classes of gross cash receipts and gross
cash payments are disclosed

22. In-Direct Method
 Whereby profit or loss is adjusted for the
effects of transactions of a non-cash
nature.