Preview

Cach Flow

Better Essays
Open Document
Open Document
2384 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Cach Flow
Overview
IAS 7 Statement of Cash Flows requires an entity to present a statement of cash flows as an integral part of its primary financial statements. Cash flows are classified and presented into operating activities (either using the 'direct' or 'indirect' method), investing activities or financing activities, with the latter two categories generally presented on a gross basis. IAS 7 was reissued in December 1992, retitled in September 2007, and is operative for financial statements covering periods beginning on or after 1 January 1994.

History of IAS 7
June 1976 October 1977 July 1991 December 1992 1 January 1994 6 September 2007 Exposure Draft E7 Statement of Source and Application of Funds IAS 7 Statement of Changes in Financial Position Exposure Draft E36 Cash Flow Statements IAS 7 (1992) Cash Flow Statements Effective date of IAS 7 (1992) Retitled from Cash Flow Statements to Statement of Cash Flows as a consequential amendment resulting from revisions to IAS 1 IAS 7 amended by Annual Improvements to IFRSs 2009 with respect to expenditures that do not result in a recognised asset. Effective date for amendments from IAS 27(2008) relating to changes in ownership of a subsidiary Effective date of the April 2009 revisions to IAS 7

16 April 2009

1 July 2009

1 January 2010

Related Interpretations o None

Amendments under consideration by the IASB o Research project - Disclosure framework

Summary of IAS 7
Objective of IAS 7 The objective of IAS 7 is to require the presentation of information about the historical changes in cash and cash equivalents of an entity by means of a statement of cash flows, which classifies cash flows during the period according to operating, investing, and financing activities.

Fundamental principle in IAS 7 All entities that prepare financial statements in conformity with IFRSs are required to present a statement of cash flows. [IAS 7.1] The statement of cash flows analyses changes in cash and cash
Continue Reading
View Writing Issues

You May Also Find These Documents Helpful

  • Satisfactory Essays

    Is3350 Unit 1 Assignment
    • 2098 Words
    • 9 Pages

    Is3350 Unit 1 Assignment

    An extract from the draft statement of comprehensive income for the year to 31 December…

    • 2098 Words
    • 9 Pages
    Satisfactory Essays
    Read More
  • Satisfactory Essays

    xacc 291 week 7
    • 391 Words
    • 2 Pages

    xacc 291 week 7

    The term cash flows refer to the receipts and payment of cash. A financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents is known as a statement of cash flow. Similar to an income statement, a cash flow statement records a company’s performance over a period of time. Consistently, companies will disclose the cash arising are generally required to prepare a statement of cash flow in their annual reports because it contains vital information for lenders and investors who primarily make informed and economic decisions about the companies. Generally during a company’s accounting period their cash flow is categorized and divided into three sections which are: cash flow from operations, financing and investing. The primary reasons these transactions are catergorized and divided is so investors will understand what the transactions are related to and how each section paints a vivid picture of how the company is doing from both a cash standpoint and overall health. The statement of cash flow is very important for companies that are required to prepare and present their financial statement in accordance to with international accounting standards and international financial reporting standards.…

    • 391 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Better Essays

    Wgu Accounting Task 1
    • 3248 Words
    • 13 Pages

    Wgu Accounting Task 1

    In order to ensure application of the accounting concepts and principles, major accounting standard-setting bodies have incorporated them into their reporting frameworks such as the IASB…

    • 3248 Words
    • 13 Pages
    Better Essays
    Read More
  • Satisfactory Essays

    Acc291
    • 267 Words
    • 2 Pages

    Acc291

    Companies use a statement of cash flows because it shows where cash came from and how it was used. The other main financial reports only provide a limited insight into the cash transactions of the company. While the other main reports utilize the accrual accounting basis, the statement of cash flows changes the accrual basis using the direct or indirect method. The indirect method is primarily used, however both are acceptable under generally accepted accounting principles. The statement of cash flows is divided into three sections and shown in the report in the following order. Operating activities is reported first, followed by investing activities, and finally financing activities. Operating activities deals with each transaction that involves both revenues and expenses. This category is considered important because operating activities are the best predictor of a company’s ability to generate future cash. This obviously is important information for investors as well as creditors when evaluating a company’s ability to grow and move forward. Investors can make educated guesses regarding the future cash flows based on the statement of cash flows better than viewing the other financial reports that utilize the accrual accounting basis. Investing activities include the transactions to purchase, sell, or dispose of company property. Loans and debt collection are also included in the investing activities with company plant and equipment. Investors can view the statement of cash flows to see if the company has sufficient cash on hand to pay stockholder dividends and meet future demands. Finally, financing activities includes receiving cash from stockholders, buying back company stock, and paying dividends.…

    • 267 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Satisfactory Essays

    Acc291 Reflection Week 4
    • 460 Words
    • 2 Pages

    Acc291 Reflection Week 4

    When preparing a statement of cash flows, there are two different methods that can be used; there is the direct method, and there is also the indirect method. The direct method shows operating cash receipts and payments, making it more consistent with the objective of a statement of cash flow, while the indirect method adjusts net income for items that do not affect cash. The FASB allows both methods to be used because in the end the results of the total amount for net cash provided by operating activities arrive in the same way. Companies use numerous adjustments when preparing such statements so following a proper guide such as the direct method or indirect method will help to ensure that everything is properly in order the way it should be.…

    • 460 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Good Essays

    Bus 700 Final Exam
    • 652 Words
    • 3 Pages

    Bus 700 Final Exam

    There are 4 categories of financial assets under IFRS and 3 categories under ASC 825. Discuss the amount at which each category is initially recognized and how changes in the initially recognized amounts are reported in the balance sheet and in the statement of comprehensive income for each category. Include in your answer your opinion as to the appropriateness of each of these financial reporting treatments.…

    • 652 Words
    • 3 Pages
    Good Essays
    Read More
  • Good Essays

    Comm320
    • 585 Words
    • 3 Pages

    Comm320

    At the conclusion of this course, it is expected that students will have developed skills necessary to prepare, understand and interpret financial statements prepared in accordance with international and private enterprise accounting standards (IFRS and ASPE). In order to achieve this goal, the course content and emphasis will consist of a blend of conceptual and procedural elements.…

    • 585 Words
    • 3 Pages
    Good Essays
    Read More
  • Good Essays

    Identify the alternative performance (operating) measures
    • 350 Words
    • 2 Pages

    Identify the alternative performance (operating) measures

    IAS 1 paragraph 82 states that the statement of comprehensive income shall include specific line items for the period. Paragraph 85 states that an entity shall present additional line items, heading and subtotals in the statement of comprehensive income… Paragraph 88 states that an entity shall recognize all items of income and expense in a period in profit or loss unless IFRS requires or permits otherwise. Paragraph 97 states that when items of income or expense are material, an entity shall disclose their nature and amount separately. And paragraph 99 states that an entity shall present an analysis of expenses recognized in profit or loss using a classification based on either their nature or their function within the entity. Whichever provides information that is reliable and more relevant.…

    • 350 Words
    • 2 Pages
    Good Essays
    Read More
  • Good Essays

    Financial Statement Review
    • 688 Words
    • 3 Pages

    Financial Statement Review

    The statement of cash flows statements reports over a period of time and covers cash inflows and outflows. Generally the statement of cash flows refers to the day to day operations or operating cash flows, cash from investing and cash from financing. It is difficult for a company to manipulate the cash flow and therefore is a very important financial statement.…

    • 688 Words
    • 3 Pages
    Good Essays
    Read More
  • Good Essays

    Cash Flows
    • 780 Words
    • 4 Pages

    Cash Flows

    The cash flow statement reports a company’s inflow and outflow of cash. While an income statement provides the information about whether or not a company made a profit, a cash flow statement can tell you whether the company generated cash. The cash flow statement also provides information regarding investing and financing activities that do not require the consumption of cash. All of these aspects are important for a company management to monitor because they all have such a strong effect on the financial health of the company. The examination of the cash flow statement should be a high priority for potential investors; the amount of money that flows in and out of a company is something that investors might want to monitor.…

    • 780 Words
    • 4 Pages
    Good Essays
    Read More
  • Good Essays

    Bus1002 Unit 2 Assignment
    • 1258 Words
    • 6 Pages

    Bus1002 Unit 2 Assignment

    The framework consists of 9 fundamental points, the objective of general purpose financial reporting, The Reporting Entity , Users of accounts, Objectives of Financial Statements, Underlying Assumptions , Qualitative Characteristics , Elements , Recognition , Measurement . The conceptual framework is based on two underlying accounting concepts, the accrual basis of accounting and the going concern. The accrual basis accounting portrays the results of transactions and other events on a reporting entity’s economics resources and claims. This is important because the information on the events of the reporting entity at the time which they are published can affect the way in which the entity is assessed as a good judgment cannot be made just on the cash receipts and payments during the period it took place. These financial statements are usually prepared on the assumption that the business is a going concern and will continue to operate in the projected…

    • 1258 Words
    • 6 Pages
    Good Essays
    Read More
  • Better Essays

    Acc 291 Week 4
    • 1112 Words
    • 5 Pages

    Acc 291 Week 4

    In any industry, have a clear picture of an organizations cash, and the flow of where it goes is an important part of a successful organization. Many organizations use different methods of accounting to view financial information. But some of the methods don’t provide certain information that is when the Cash Flow Statement comes into play. For example the balance sheet, income statement, and retained earnings statement only provide a limited amount of information regarding an organization cash flow (cash receipts and cash payments). For example, balance sheets will show the increase in property, plant, and equipment during a year. Although they do not show how the additions were financed or paid for. The income statement shows an organizations net income, it does not give a clue about the amount of cash generated by operating activities. Retained earnings statement shows cash dividends declared but not cash dividends that are paid during a year. What makes Cash Flow Statements so important is that they provide a detailed summary of where cash came from and how it was used compared to the other reports.…

    • 1112 Words
    • 5 Pages
    Better Essays
    Read More
  • Powerful Essays

    employee benefits
    • 2027 Words
    • 9 Pages

    employee benefits

    IAS 19 Retirement Benefit Costs (revised as part of the 'Comparability of Financial Statements' project based on E32)…

    • 2027 Words
    • 9 Pages
    Powerful Essays
    Read More
  • Satisfactory Essays

    POWER OF CASH FLOW RATIOS
    • 266 Words
    • 1 Page

    POWER OF CASH FLOW RATIOS

    The importance of this article is to bring to light the value and vital role cash flow statements play although often ignored by auditors and accountants. Most auditors and accountants usually focus more on the balance sheet and income statements that tend to be unfortunate because the cash flow statements offer more useful and detailed insights on financial ratios that are often needed in detecting frauds and red flags during examinations. For instance, balance sheets provide only date in time perspectives whereas cash flow statements provide activities over a continuous period of time. On the other hand, income statements provide results of operations over a period of time whereas the cash flow statement discloses other important changes in resources resulting from financing and investment activities. The cash flow statements complements the income statement and balance sheet by providing essential information through operating, investing and financing activities in the form of ratios that serve as powerful and effective analytical tools. These ratios such as the quick or current ratios show indicators the liquidity of a firm’s better than the income statement or balance sheet. This provides lenders insights of a firm’s ability to pay obligations, risks and credibility.…

    • 266 Words
    • 1 Page
    Satisfactory Essays
    Read More
  • Good Essays

    iasb
    • 2067 Words
    • 9 Pages

    iasb

    On January 25, 2001, the International Accounting Standards Foundation (IASF) was incorporated as a tax-exempt organization in the US state of Delaware.[2] On February 6, 2001, the International Financial Reporting Standards Foundation was also incorporated as a tax-exempt organization in Delaware.[3] The IFRS Foundation is the parent entity of the International Accounting Standards Board (IASB), an independent accounting standard-setter based in London, England.[4]…

    • 2067 Words
    • 9 Pages
    Good Essays
    Read More

Related Topics