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FINANCIAL ACCOUNTING ABE (Diploma in Business Management) Lecturer :M. M. Ahsan Session : 01Week : 10 Lecture No : 10Date :

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Presentation on theme: "FINANCIAL ACCOUNTING ABE (Diploma in Business Management) Lecturer :M. M. Ahsan Session : 01Week : 10 Lecture No : 10Date :"— Presentation transcript:

1 FINANCIAL ACCOUNTING ABE (Diploma in Business Management) Lecturer :M. M. Ahsan Session : 01Week : 10 Lecture No : 10Date : 20/03/2012 Buckingham College of London

2 STATEMENT OF CASH FLOWS IAS 07

3 Presentation of Statements of Cash Flows A statement of cash flows prepared under the terms of IAS 7 separates: Operating activities Investing activities – covering capital expenditure, acquisitions and disposals, equity dividends paid, interest received, dividends received Financing activities – covering proceeds from issuing shares, other equity instruments, debentures and other loans, principal lease payments, dividends paid. Note that interest and taxation paid are treated as part of operating activities.

4 Overall presentation of a Cash Flow Statement Cash flows from operating activities X Cash flows from investing activities X Cash flows from financing activities X Increase/decrease in net cash and cash equivalent X Cash and cash equivalent at the start of the yearX Cash and cash equivalent at end of the yearX

5 Operating Activities (Direct) Cash received from customers X Cash payment to suppliers(X) Cash paid to and on behalf of employees(X) Interest paid(X) Income taxes paid(X) Net cash inflow from operating activities X

6 Operating Activities (Indirect) Operating Activities Profit before taxX Adjustments for : DepreciationX Profit/loss on sale of assetsX InterestX AmortizationX X Increase/decrease in trade receivables X Increase/decrease in inventoryX Increase/decrease in trade payablesX Cash generated from operationsX Interest paidX Income taxes paidX Net cash inflow/outflow from operating activitiesX

7 Cash flows from Investing activities Cash inflows from investing activities include : Interest received in cash terms Dividends received in cash terms Proceeds from the sale of non-current assets Cash outflows from investing activities include : Payment made for the purchase of non-current assets such as property, plant and equipment Payments made for the acquisition of subsidiaries

8 Cash flows from Financing activities Cash inflows include : Proceeds from the issue of share capital Proceeds from long term borrowings Cash outflows include : Payment of finance lease liabilities Payment of owners to acquire or redeem shares Repayments of a mounts borrowed other than finance leases Equity dividend paid


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