22) Accounting Standard 3 stands for what?
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Accounting Standard 3 (AS 3) stands for Cash Flow Statement.
- ❖ Cash Flow Statement is the summary statement of a company's cash received and cash disbursement over a period of time which also explains the reasons for the changes in case position of the firm.
- ❖ Cash Flow Statement is a statement of movement of cash flow. It is an important tool of cash management.
- ❖ Accounting Standard 3 deals with the provision of information about the historical changes in cash and cash equivalents of an enterprise by means of a cash flow statement which classifies cash flows during the period from operating, investing and financing activities.
- ❖ Cash Flow Statement under Accounting Standard 3 is one of the mandatory financial statement of a company registered under Companies Act is required to prepare along with the Balance Sheet and the Statement of Profit and Loss.
- ❖ Accounting Standard 3 is not mandatory for Small and Medium Sized Companies. However, such companies are encouraged to comply with the Standard.
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