Question

Cash flow statement is different as it classifies financial information into three major heads which allow the stakeholders in effective decision making. Discuss the broad heads as defined under AS 3 cash flow statement. What can be the potential benefits of preparing a cash flow statement? Elaborate

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Answer 1

Explanation:

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Answer 2

Definition of Cash Flow statement;

Cash flow statement- handles all data through financial statement under cash.

Features of broadheads under AS 3 cash flow statement;

• There are three categories under AS 3 cash flow statement as follows;

1. Operating activities
2. Investing activities
3. financing activities

• Operating activities cash comes under business sale and cash paid while buying supplies.
• The second category of cash flow statement is Investing activities, in which the investments are made for future to expand more business.
• The last category of Financing activities depends on the size of the business investments and debts in business.

Benefits of Cash flow statement;

• Cash flow statement often called as financial statement. It helps with the investments and debts flowing in business.
• All the output and input summaries of cash are flowed and included in the cash flow statement.
• Repaying of loans, investments, buying stocks and shares are categorised in cash flow statement.

Therefore, Cash flow statement are helpful to expand business, debts, and buying stocks are shares.

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