PAS 7

• The statement of cash flows shows the historical changes (i.e., sources and utilization) in cash and cash equivalents during the period.
• Cash flows are classified into (a) operating activities, (b) investing activities, and (c) financing activities.
• Operating activities include transactions that enter into the determination of profit or loss, i.e., income and expenses.
• Investing activities include transactions that affect non-current assets and other non-operating assets.
• Financing activities include transactions that affect equity and non-operating liabilities.
• Only transactions that have affected cash and cash equivalents are included in the statement of cash flows. Non-cash transactions are excluded and disclosed only.
• Entities other than financial institutions have options in presenting cash flows relating to interests and dividends.
• Cash flows from operating activities may be reported using either (a) direct method or (b) indirect method.
• The direct method shows each major class of gross cash receipts and gross cash payments. Under the indirect method, profit or loss is adjusted for the effects of non-cash items and changes in operating assets and liabilities.
• The direct method shows each major class of gross cash receipts and gross cash payments.
• Under the indirect method, profit or loss is adjusted for the effects of non-cash items and changes in operating assets and liabilities.
• Cash flows relating to investing and financing activities are presented separately at gross amounts, unless they qualify for net presentation.