This standard requires the presentation of information about the historical changes in cash and cash equivalents of an entity by means of a cash flow statement which classifies cash flows during the period by operating, investing and financing activities. The cash flow statement identifies the sources of cash inflows, the items on which cash was expended during the reporting period, and the cash and cash equivalents as at the reporting date. The cash flow statement is intended to provide users of financial statements with information for both accountability and decision-making purposes. Cash flow information allows users to understand how a public sector entity raised the cash it required to fund its business and administrative operations and how that cash was used.
IAS 7, Cash Flow Statements
The cash flow statement reports the cash flows during a reporting period and serves to analyze the changes in cash and cash equivalents.
Cash flows are inflows and outflows of cash and cash equivalents.
Cash comprises cash on hand and demand deposits, whereas cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. In some countries, short-term bank borrowings (overdraft facilities) are also considered to be cash provided they are payable on demand, thereby forming ...