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IFRS The indirect method cash flow statement preparation

IFRS The indirect method cash flow statement preparation : International Financial Reporting Standards (IFRS) is a set of accounting standards developed by an independent, not-for-profit organisation called the International Accounting Standards Board (IASB).

IFSR Provides global framework for should companies prepare and disclose their financial statements. All the general guidelines for preparation of financial statements are provided in IFRS.

IFRS provides international standards, having an international standard is very much important for the company. A single set of world wide standard will simply accounting procedure for a company to use one reporting language. Investors and auditors will also be provided with cohesive view of finance.

IFRS The indirect method cash flow statement preparation

IFRS The indirect method cash flow statement preparation

IFRS The indirect method cash flow statement preparation Upon successful completion of this module you should know the financial reporting requirements for the statement of cash flows in accordance with the IFRS for SMEs as issued in July 2009. Furthermore, through the completion of case studies that simulate aspects of the real-world application of that knowledge, you should have enhanced your competence to present the statement of cash flows in accordance with the IFRS for SMEs. In particular you should, in the context of the IFRS for SMEs:

Important Note – Preparing for IFRS?
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  1. Know the purpose of the statement of cash flows.
  2. Understand the requirements for presenting this statement.
  3. Be able to distinguish cash equivalents from other financial assets.
  4. Be able to distinguish the cash flows from operating, investing and financing activities.
  5. Be able to prepare the statement of cash flows using both the indirect method and the direct method.
  6. Be able to prepare notes to financial statements and commentary by management in accordance with the requirements of Section 7 of the IFRS for SMEs.

IFRS The indirect method cash flow statement preparation

The statement of cash flows is one of the components of a company’s set of financial statements, and is used to reveal the sources and uses of cash by a business. It presents information about cash generated from operations and the effects of various changes in the balance sheet on a company’s cash position.

Under the indirect method of presenting the statement of cash flows, the presentation of this statement begins with net income or loss, with subsequent additions to or deductions from that amount for non-cash revenue and expense items, resulting in net income provided by operating activities.

The format of the indirect method appears in the following example. In the presentation format, cash flows are divided into the following general classifications:

  • Cash flows from operating activities
  • Cash flows from investing activities
  • Cash flows from financing activities

Overview of Cash flow statements

IFRS The indirect method cash flow statement preparation

IFRS The indirect method cash flow statement preparation: Learning objectives Upon successful completion of this module you should know the financial reporting requirements for the statement of cash flows in accordance with the IFRS for SMEs as issued in July 2009. Furthermore, through the completion of case studies that simulate aspects of the real-world application of that knowledge, you should have enhanced your competence to present the statement of cash flows in accordance with the IFRS for SMEs. In particular you should, in the context of the IFRS for SMEs:

  1. Know the purpose of the statement of cash flows;
  2. Understand the requirements for presenting this statement;
  3. Be able to distinguish cash equivalents from other financial assets;
  4. Be able to distinguish the cash flows from operating, investing and financing activities;
  5. Be able to prepare the statement of cash flows using both the indirect method and the direct method; and
  6. Be able to prepare notes to financial statements and commentary by management in accordance with the requirements of Section 7 of the IFRS for SMEs.

IFRS The indirect method cash flow statement preparation:  Syllabus

Conceptual Foundations of Financial Statements.

Important Note – Preparing for IFRS?
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  • The objective of financial reporting.
  • The main assumptions.
  • Qualitative characteristics of financial reporting.
  • Elements of Financial Statements: recognition and measurement.
  • Concepts of capital.

IFRS IAS 7 Statement of Cash Flows (CCF)

  • Purpose and application of the standard. Concepts.
  • The structure of the Cash Flow Statement.
  • Classification of business operations with the objective of CFS.
  • Types of cash flow statement presentation.
  • A direct method for preparation of cash flow statement.
  • The indirect method cash flow statement preparation.
  • Identification of inflows and outflows of cash and cash equivalents provided by the bank’s operations.

IFRS IAS 7 Statement of Cash Flows (CCF): Contents

  1. Introduction to the requirements
  2. Requirements
  3. Scope of this Section
  4. Cash equivalents
  5. Information to be presented in the statement of cash flows
  6. Reporting cash flows from operating activities
  7. Reporting cash flows from investing and financing activities
  8. Foreign currency cash flows 21 Interest and dividends Income tax
  9.  Non-cash and cash transactions
  10. Components of cash and cash equivalents
  11.  Other disclosures

IFRS IAS 7 Statement of Cash Flows (CCF)

This module, updated in January 2013, focuses on the requirements for the presentation of the statement of cash flows in accordance with Section 7 Statement of Cash Flows of the IFRS for SMEs that was issued in July 2009 and the related non-mandatory guidance subsequently provided by the IFRS Foundation SME Implementation Group.. Section 3 Financial Statement Presentation sets out general presentation requirements and Sections 4–8 focus on the requirements for presenting the individual statements that together comprise a complete set of financial statements.

This module introduces the learner to the subject, guides the learner through the official text, develops the learner’s understanding of the requirements through the use of examples and indicates significant judgements that are required in presenting a statement of cash flows. Furthermore, the module includes questions designed to test the learner’s knowledge of the requirements and case studies to develop the learner’s ability to present a statement of cash flows in accordance with the IFRS for SMEs.

IFRS IAS 7 Statement of Cash Flows (CCF): Learning objectives Upon successful completion of this module you should know the financial reporting requirements for the statement of cash flows in accordance with the IFRS for SMEs as issued in July 2009. Furthermore, through the completion of case studies that simulate aspects of the real-world application of that knowledge, you should have enhanced your competence to present the statement of cash flows in accordance with the IFRS for SMEs. In particular you should, in the context of the IFRS for SMEs:

  1. Know the purpose of the statement of cash flows.
  2. Understand the requirements for presenting this statement.
  3. Be able to distinguish cash equivalents from other financial assets.
  4. Be able to distinguish the cash flows from operating, investing and financing activities.
  5. Be able to prepare the statement of cash flows using both the indirect method and the direct method.
  6. Be able to prepare notes to financial statements and commentary by management in accordance with the requirements of Section 7 of the IFRS for SMEs.

IIFRS IAS 7 Statement of Cash Flows (CCF)

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IFRS IAS 7 Statement of Cash Flows (CCF)

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