9

Cash Flow Statement

CHAPTER OBJECTIVES

This chapter will help the readers to:

  • Appreciate the need for cash flow statement.
  • Learn preparation of cash flow statement.
  • Differentiate between cash flow from operating activities, financing activities and investing activities.
  • Understand and analyse the information conveyed by the cash flow statement of various companies.
  • Identify the key requirements of AS 3 ‘Statement of cash flow’.
9.1  NEED FOR CASH FLOW STATEMENT

The balance sheet and the profit and loss account provide useful information about the financial health of a business enterprise. The former provides us information about the sources (liabilities) and application (assets) of funds at the end of the accounting year, whereas the later ...

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