IA7

Statement of Cash Flows

A financial statement that operates on a cash basis, providing insights into a company's ability to generate cash.

Operating Activities in Cash Flow Statement

Principal revenue-generating activities of an entity, including cash receipts from sales and payments to suppliers.

Investing Activities

Cash flows involving the acquisition and disposal of long-term assets and investments not classified as cash equivalents.

Financing Activities

Changes in the size and composition of contributed equity and borrowings, including cash proceeds from issuing shares.

Cash Equivalents

Short-term, highly liquid investments that can be quickly converted into cash, typically with a maturity of less than three months.

IAS 7

An International Accounting Standard aimed at providing information about historical changes in cash and cash equivalents.

Direct Method of Cash Flow Preparation

A method that discloses gross cash receipts and payments in the cash flow statement.

Indirect Method of Cash Flow Preparation

A method that adjusts profit for non-cash items and changes in working capital to present cash flows.

Interest and Dividends Cash Classification

Cash flows from interest and dividends can be classified as either operating or financing cash flows based on the entity's choice.

Cash Flow Impact of Taxes on Income

Generally classified as operating activities unless directly tied to investing or financing activities.

Reconciliation in Cash Flow Statement

A summary that shows the overall movement in cash and cash equivalents, aligning with the balance sheet.

Comparison of Cash Flow Reporting

Consistency in the classification of cash flows across reporting periods is essential for comparability.

Cash flows from investments in subsidiaries

Only cash flows between the entity and the investee, such as dividends or advances, should be reported.