5.3 CASH AND CASH EQUIVALENTS

5.3.1 Relevance for the Statement of Cash Flows

5.3.1.1 Cash and Cash Equivalents versus Funds

Determining changes in cash and cash equivalents is the focal point of the statement of cash flows, as cash flows are inflows and outflows of cash and cash equivalents.46

Comment: U.S. GAAP before the issuance of FASB Statement No. 95 (Subtopic 230-10) and the 1977 version of IAS 7 referred to a larger concept of funds. Certain local GAAP still require or permit statements that depict the changes of various notions of funds, including changes in net working capital.

5.3.1.2 Correspondence with Captions in the Statement of Financial Position

Under IFRSs, U.S. GAAP, and Subsection 210-10-S99-1 (Regulation S-X) for commercial and industrial companies, the statement of financial position must display cash and cash equivalents.47 Under U.S. GAAP, title or titles for cash and cash equivalents used in the statement of financial position and in the statement of cash flows must correspond or be similar. Subtopic 230-10 (FASB Statement No. 95) permits the use simply of cash but not funds.48 Subsection 210-10-S99-1 (Regulations S-X, Rule 5-02) also uses cash and the expression cash and cash items.49 Registered investment companies and insurance companies must separately report a single caption for cash on hand and demand deposits. Interest-earning cash equivalents of insurance companies are instead part of short-term investments. Employee stock purchase, savings, ...

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