Cash Flow Statement Page 9
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30MODULE - 6A
Cash Flow Statement
Analysis of Financial Statements
(iii) Cash flows are classified in to three i.e. operating activities, financing
activities and ........................ activities.
(iv) SEBI guidelines recommend only ........................ method for preparing
cash flow statement.
Notes
30.3 PREPARATION OF CASH FLOW STATEMENT
(i) Operating Activities
Cash flow from operating activities are primarily derived from the principal
revenue generating activities of the enterprise. A few items of cash flows
from operating activities are :
(i) Cash receipt from the sale of goods and rendering services.
(ii) Cash receipts from royalties, fee, Commissions and other revenue.
(iii) Cash payments to suppliers for goods and services.
(iv) Cash payment to employees
(vi) Cash payment or refund of Income tax.
Determination of cash flow from operating activities
There are two stages for arriving at the cash flow from operating activities
Stage-1
Calculation of operating profit before working capital changes, It can be
calculated in the following manner.
Net profit before Tax and extra ordinary Items
xxx
Add Non-cash and non operating Items
which have already been debited to profit and Loss Account i.e.
Depreciation
xxx
Amortisation of intangible assets
xxx
Loss on the sale of Fixed assets.
xxx
Loss on the sale of Long term Investments
xxx
Provision for tax
xxx
Dividend paid
xxx
xxx
xxx
70
ACCOUNTANCY
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