Format of Cash Flow Statement of AS-3

Format of Cash Flow Statement as per AS-3

AS-3 lays down a format for the cash flow statement which identifies separately the main activities resulting in cash inflows and outflows. The standard requires that tree separate categories of the cash flow should normally be show in the cash flow statement.

These are: 1. Operating Activities

2. Investing Activities

3. Financing Activities

Operating Activities

Operating Activities

Cash flow operating activities are derived from the principle revenue-producing activities of the enterprises.

The example are:

(a) Cash receipts from the sale of goods and the rendering of services;

(b) Cash receipts from the royalties, fees, commissions and other revenue;

(d) Cash payment to and on behalf of employees;

(e) Cash receipts and cash payments of an insurance enterprise for premiums and claims, annuities and other policy benefits;

(f) Cash payments or refunds of income taxes unless they can be specifically identified with financing and investing activities; and

(g) Cash received and payments relating to future contracts, forwards contracts, are held for dealing purposes.

Investing Activities

The separate disclosure of cash flow arising from investing activities is important because the cash flows represents the extent to which expenditures have been made for resources intended to generate future income and cash flows.

Examples of cash flows arising from investing activities are:

(a) Cash payment to acquire fixed assets (including intangibles). These payments include those relating to capitalised research and development cost and self-constructed fixed assets;

(b) Cash receipts from disposal of fixed assets (including intangibles):

(c) Cash payment to acquires shares, warrants or debt instruments of other enterprise and interest in joint ventures (other than payments for those instruments considered to be cash equivalents and those held for dealing and trading purposes);

(d) Cash receipts from disposal of shares, warrants or debt instruments of other enterprise and interest in joint ventures (other than receipts from those instruments considered to be cash equivalents and those held for dealing and trading purposes);

(e) Cash advanced and loans made to third parties (other than advances and loan made by a financial enterprise)

(f) Cash receipts from the repayment of advances and loan made to third parties (other than advances and loans of a financial enterprise);

(g) Cash payments for futures contracts, forward contracts option contracts and swap contracts except when the contracts are held for dealing or trading purpose, or the payment are classified as financing activities and

(h) Cash receipts from future contracts, forward contracts option contracts and swap contracts except when the contracts are held for dealing or trading purpose, or the receipts are classified as financing activities.

Financing Activities

The separate disclosure of cash flow arising from financing activities is important because it is useful in predicting claims on future cash flow by providers of funds (both capital and borrowings) to the enterprise. Examples of cash flows arising from financing activities are:

(a) Cash proceeds from issuing shares or other similar instruments;

(b) Cash proceeds from issuing debentures, loans, notes, bonds and other short and long-term borrowings;

(d) Payments of dividends

(e) Payment of interest