Finance Cash Flow Statement

Question: Discuss about theFinancefor Cash Flow Statement. Answer: Introduction:- Cash flow statement is one of the main financial statements as per the statutory requirements for annual reporting. The statement relates the cash balance of the accounting entity with the three main business activities operating, investing and financing. Cash Balance:- According to AS 3, cash flow statement should exhibit the balance of both cash and cash equivalent items. The term cash can be defined as the available cash in hand and amount of deposits on demand in bank. Cash equivalent items are those short-term and highly liquid investments, which can be converted into cash very easily and the values of the investments do not change very significantly for such conversion (Pavlovi? Bogdanovi?, 2013). Operating Activities:- Operating activities can be described as the business activity, which is the main source of income for the accounting entity. In general, operating activities not only generates revenue for the entity but also helps the entity to create an identity amongst the public (Miao et al., 2016). Investing Activities:- Any form of purchase or sale of long-term non-current assets, including various investments, which cannot be classified as cash equivalent, is regarded as the investing activities (Hoskin et al.,2014). Financing Activities:- Financing activities are such business activities, which cause altercations in volumes and proportions of owners fund, invested by the owner as capital, and different types of loans and borrowings, taken by the accounting entity (Lee Parker, 2013). Conclusion:- The statement of cash flow exhibits the effect of these activities, stated above, on the balance of cash and cash equivalent items within a certain period. References:- Hoskin, R. E., Fizzell, M. R., Cherry, D. C. (2014).Financial accounting: a user perspective. Wiley Global Education Lee, T. A., Parker, R. H. (2013).Towards a Theory and Practice of Cash Flow Accounting (RLE Accounting)(Vol. 50). Routledge. Miao, B., Teoh, S. H., Zhu, Z. (2016). Limited attention, statement of cash flow disclosure, and the valuation of accruals.Review of Accounting Studies,21(2), 473-515. Pavlovi?, M., Bogdanovi?, J. (2013). Cash flow statement.kola biznisa, (3-4), 129-147