ABS FOUNDATION

CASH FLOW STATEMENT

Cash flow Statement is a statement which shows

Change in ------ (increase or decrease)

“Cash and Cash equivalent” between two accounting period – 2023 2024
(Previous year) (Current year)

Three Activities involved in Cash Flow management

3 Activities

Operating Activities Investing Activities Financing Activities

OA IA FA

1. Operating Activity
It is the main revenue generating activity of the firm.

2. Investment Activity
It involves purchase and sale of fixed assets, investment (long-term), purchase of goodwill (↑)

3. Financing Activity

➢ It involves issue of shares (equity shares and preference shares) plus premium.

➢ Issue of debentures plus premium

➢ Redemption of preference share capital (+) premium.

➢ Redemption of debentures (+) premium

➢ Proposed dividend paid

➢ Payment of interim dividend

➢ Interest paid on debentures and bank loan

Two Methods of Cash Flow management

Direct method Indirect Method

Ignore Profit and loss concept in Profit and loss concept is

Operating activities recognized while making
Operating activities
ADD: Cash inflow
LESS : Cash Outflow

COMPILED BY: CA ANKESH SINHA Page no - 1

 ABS FOUNDATION

CASH FLOW STATEMENT

Particulars C.Y. P.Y.
A. Cash flow from Operating Activities
(+)
B. Cash flow from Investing Activities
(+)
C. Cash flow from Financing Activities

D. NET CASH FLOW (A + B + C) (+) (-)

(+)
E. Opening cash and cash equivalent

E. Closing cash and cash equivalent

NOTE – 1
CASH AND CASH EQUIVALENT

 Cash in hand

 Cash at Bank

 Marketable securities

Investment

Less than 3 months 3 months < 12 months 12 months and more

Marketable Securities Current Assets fixed Assets

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 ABS FOUNDATION
A. CASH FLOW FROM OPERATING ACTIVITIES

1. Net Profit (+ve) or Net loss (-ve) {CURRENT YEAR – PREVIOUS YEAR}
(+)
TPP
2. Transfer to General Reserve {CURRENT YEAR – PREVIOUS YEAR}
(excluding profit on sale of investment)
(+)
3. Proposed Dividend of Current year
(+)
4. Provision for tax “made” during C.Y. (-) Tax refund
(+)/(-)
5. Extraordinary Item
PROFIT BEFORE TAX & EXTRA ORDINARY ITEMS
(+)
D2A2 I2P2L
6. D2 – Depreciation provided during C.Y.
– Discount on issue of debentures

7. A2 – Amortization of Intangible assets

– Assets written off

8. I2 – Interest paid on debenture / bank loan

– Interim dividend paid

9. P2 – Premium on redemption of preference share

– Premium on redemption of Debenture

10. L – loss on sale of fixed assets or investment

( - ) IP
11. I – Interest received or dividend received

12. P – Profit on sale of fixed assets or investment

13. PROFIT BEFORE WORKING CAPITAL CHANGES

14. (+) Loss CA ↓ (jitna loss) CL↑ (loss)

15. (+) Profit CA ↑ (jitna profit) CL↓ (profit)

16. PROFIT AFTER WORKING CAPITAL CHANGES

17. (-) {Direct tax paid – tax refund}

18. Provision for tax (P.Y.)

19. (+/-) Extraordinary items (reverse)

20. NET CASH FLOW FROM OPERATING ACTIVITY (A)

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 ABS FOUNDATION

B. CASH FLOW FROM INVESTING ACTIVITIES

1. Purchase of fixed assets OR Investment (-)

2. Purchase of goodwill {CURRENT YEAR – PREVIOUS YEAR} Outflow (-)

3. Sale of fixed assets OR Investment Inflow (+)

4. Interest received or dividend received

5. NET CASH FLOW FROM INVESTING ACTIVITY (B)

C. CASH FLOW FROM FINACING ACTIVITIES

1. Issue of equity share (+) premium{CURRENT YEAR – PREVIOUS YEAR} (+)

2. Issue of Preference share (+) premium (+)

3. Issue of debenture (+) premium (+)

4. Buy back of shares (-)

5. Redemption of debenture (+) premium (-)

6. Redemption of preference shares capital (+) premium (-)

7. Interim dividend paid (adjustment) (-)

8. Final dividend paid (proposed dividend of P.Y.) (-)

9. NET CASH FLOW FROM FINANCING ACTIVITY (C)

D. NET CASH FLOW (A +B+C)

E. Opening cash and Cash equivalent

CLOSING CASH AND CASH EQUIVALENT

NOTE – 2
FIXED ASSETS A/c
Are of two types

CASE - I CASE - II

At W.D.V i.e. (Fixed assets A/c) At Cost

Fixed assets A/c (cost) Accumulated Depreciation

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 ABS FOUNDATION

CASE – I (FIXED ASSETS A/C AT WDV)

PARTICULARS ₹ PARTICULARS ₹
To Balance B/d
(Opening balance
2023)
By Balance C/d
(Closing balance
2024)

NOTE – 1
Cost of assets
(-) Accumulate Depreciation
WDV / Book Value

CASE – II (FIXED ASSETS A/C AT COST)

PARTICULARS ₹ PARTICULARS ₹
To Balance B/d
(Cost)
By Balance C/d
(Cost)

PROVISION FOR DEPRECIATION OR ACCUMULATED DEPRECIATION A/C

PARTICULARS ₹ PARTICULARS ₹
To Balance B/d
(P.Y.)
By Balance C/d

COMPILED BY: CA ANKESH SINHA Page no - 5