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What are the main features of the Cash Flow Statement?

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 ROSHNI asked about 3 years ago

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6 Answers
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 CA Sandeep Bohra answered over 2 years ago

Dear friend, -- Cash flow statement helps in efficient cash management. It is useful in evaluating financial policies and cash position of the business. Cash is the basis of all financial operations. Therefore, a projected cash flow statement will enable the management to plan and control the financial operations properly. The management can know how much cash is needed from which source it will be derived, and how much cash can be generated internally and 1 much could be obtained from outside. -- It is a periodical statement as it covers a particular period. --This statement does not recognize matching principles -- Cash flow statement helps in internal financial management. It is useful in formulation of financial plans, e.g., possibility of repayment of long-term loans dividend policy replacement of plant and machinery, etc. --Cash flow statement discloses the movements of cash and reasons thereof. It tells the reasons for less cash balance in spite of heavy operating profits or for heavy cash balance in spite of low profits. -- Cash flow statement discloses success or failure of cash planning. Actual cash flow statement and projected cash flow statement can be compared to detect deficiency, if any, in cash management. Remedial measures can then be taken to remove the deficiency.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 lochan answered about 3 years ago

**FEATURES OF CASH FLOW STATEMENT** Cash Flow Statement is very dynamic in character since it records the investment of cash from the beginning of the period to the end of the period. (ii) It is a periodical statement as it covers a particular period. (iii) This statement does not recognize matching principles. (iv) This statement helps to calculate Cash from Operations/Cash Flows from Operating Activities. (v) It exhibits the changes of financial positions relating to operational activities, investing activities and financial activities, respectively, by which an analyst can draw Thanks

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Data?1494421738 samkit kothari answered about 3 years ago

The purpose of the cash flow statement or statement of cash flows is to provide information about a company's gross receipts and gross payments for a specified period of time. The gross receipts and gross payments will be reported in the cash flow statement according to one of the following classifications: operating activities, investing activities, and financing activities. The net change from these three classifications should equal the change in a company's cash and cash equivalents during the reporting period. For instance, the cash flow statement for the year end 2015 will report the causes of the change in a company's cash and cash equivalents between its balance sheets of March 31, 2014 and March 31, 2015. In addition to the cash amounts being reported as **operating, investing, and financing activities**, the cash flow statement must disclose other information, including the amount of interest paid, the amount of income taxes paid, and any significant investing and financing activities which did not require the use of cash. The statement of cash flows is to be distributed along with a company's income statement and balance sheet.

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Open uri20170510 32134 tcchcu?1494421832 Jitendra Suthar answered about 3 years ago

Hiii friend... **Features of Cash Flow Statement** (i) Cash flow statement helps in efficient cash management. It is useful in evaluating financial policies and cash position of the business. Cash is the basis of all financial operations. Therefore, a projected cash flow statement will enable the management to plan and control the financial operations properly. The management can know how much cash is needed from which source it will be derived, and how much cash can be generated internally and 1 much could be obtained from outside. (ii) Cash flow statement helps in internal financial management. It is useful in formulation of financial plans, e.g., possibility of repayment of long-term loans dividend policy replacement of plant and machinery, etc. (iii) Cash flow statement discloses the movements of cash and reasons thereof. It tells the reasons for less cash balance in spite of heavy operating profits or for heavy cash balance in spite of low profits. (iv) Cash flow statement discloses success or failure of cash planning. Actual cash flow statement and projected cash flow statement can be compared to detect deficiency, if any, in cash management. Remedial measures can then be taken to remove the deficiency. Regards,

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Data?1494421730 rohit awasthi answered about 3 years ago

Hello Roshni According to AS 3 (Revised) on “Cash Flow Statements”, cash flow statement deals with the provision of information about the historical changes in cash and cash equivalents of an enterprise during the given period from operating, investing and financing activities. Cash flows from operating activities can be reported using either (a) the direct method, whereby major classes of gross cash receipts and gross cash payments are disclosed; or (b) the indirect method, whereby net profit or loss is adjusted for the effects of transactions of non– cash nature, any deferrals or accruals of past or future operating cash receipts or payments, and items of income or expense associated with investing or financing cash flows. As per para 42 of AS 3 , an enterprise should disclose the components of cash and cash equivalents and should present a reconciliation of the amounts in its cash flow statement with the equivalent items reported in the balance sheet. A cash flow statement when used in conjunction with the other financial statements, provides information that enables users to evaluate the changes in net assets of an enterprise, its financial structure (including its liquidity and solvency), and its ability to affect the amount and timing of cash flows in order to adapt to changing circumstances and opportunities. This statement also enhances the comparability of the reporting of operating performance by different enterprises because it eliminates the effects of using different accounting treatments for the same transactions and events. AS 3 is recommendatory at present but for companies listed on stock exchanges, its compliance is mandatory due to the listing agreement which provides for the listed companies to furnish cash flow statement in their Annual Reports. Thanks

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Vinod.P answered about 3 years ago

Dear Roshni Officially , the cash flow statement is known as Statement of Cash Flows. It is one of the main financial statements among the balance sheet, Income Statement and statement of stock holders equity. The cash flow statement reveals the cash generated and utilized during a particular period of time as indicated in the heading of the statement. The cash flow statement organizes and reports the cash generated and used in the following categories: 1.Operating Activities:- It will converts the items reported in the income statement from the accrual basis of accounting to cash 2.Investing Activities :- It reports the purchase and sale of long term investments and Fixed Assets. 3.Financing Activities :- Reports the cash flow from issue of own shares and bonds and payment of dividends. 4.Supplementary Information:- Reports the exchange of significant items that did not involve cash and reports the amount of income tax and interest paid. Kind Regards Vinod.P

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