Classification of Cash Flows as per Accounting Standard-3 (Revised)

Classification of Cash Flows as per Accounting Standard-3 (Revised) According to the Accounting Standards-3 (Revised), the cash flows can be classified into three types. 1. Cash flows from Operating Activities 2. Cash flows form Investing Activities 3. Cash flows from Financing Activities 1. Cash From Operating Activities The principal revenue producing activities of a business are called the operating activities of that enterprise. These are the main activities in which it deals. Cash flows arising from these activities are called the cash flows from operating activities. Cash flows from operating…

Calculation of Cash from operating Activities

Calculation of Cash from operating Activities (Steps) Step 1. Calculate Net Profit before Tax and Extraordinary Items. The first step while calculating cash from operating activities is the calculation of Net Profit before Tax and Extraoridinary Items explained below. Difference between the opening and closing balance of Profit and Loss Account …. Add:- Proposed dividend of current year Interim Dividend Paid during the year Transfers to Reserves Deferred Tax Liabilities (Net) Provision for expenses Provision for Tax made during current year Extraordinary Items ,if any, debited to Statement of Profit…

net profit before tax and extraordinary items

Net Profit Before Tax and Extraordinary Items Net profit before Tax and Extraordinary Items is the starting point for calculating Cash from Operating Activities. To determine Net profit before Tax and Extraordinary Items we make some adjustments to the Net Profits as shown by the Statement of Profit and Loss of a concern by addind and subtracting various Items. Calculation of Net Profit Before Tax and Extraordinary Items Difference between the opening and closing balance of Profit and Loss Account Add:- Proposed dividend of current year Interim Dividend Paid during…