Accounting - Cach Flow Statement, Study notes of Accounting

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Cash Flow Statement

Cash and cash equivalent means Cash in hand Cash at bank Cash credit Treasury bills Commercial papers Short term marketable securities

C and CE

 (^) It can flow from three activities

1. Operating
2. Investing
3. Financing

Application of Cash flow

Liquidity management Short term planning Management decision

 (^) Inflow in operating activities

1. Cash sales
2. Cash received from debtors
3. Cash from commission , fees and royalties
4. Cash from trading of financial engineering products

cont

5. Cash received from interest and dividend for financial companies
6. Sale of securities in financial companies

Inflow in Investing Activities

Sale of fixed asset/investments Interest received Dividend received

Outflow in Investing activities

Purchase in fixed asset/investments R&D Cash advances and loans made to 3rd parties

Outflow in Financing activities

Payment of loans Redemption of shares Buyback of equity shares Payment of interest and dividend

Significant cash flow

Current account vs Cash and CE Eg cash received from debtors Non current account vs Cash and CE Eg purchase of goodwill