PAS 7

Statement of Cash Flows: A financial statement that provides information about the sources and uses of cash and cash equivalents during a specific period.

Cash: Cash on hand and cash in bank.

Cash Equivalents: Short-term, highly liquid investments readily convertible to known amounts of cash with insignificant risk of changes in value.

Operating Activities: Cash flows primarily derived from the entity's principal revenue-producing activities. Examples include cash receipts from sales, cash payments for purchases, and cash payments for operating expenses.

Investing Activities: Involve the acquisition and disposal of noncurrent assets and other investments. Examples include cash flows from buying and selling property, plant, and equipment, and investments in other entities.

Financing Activities: Affect the entity's equity capital and borrowing structure. Examples include cash receipts from issuing shares or debt instruments, and cash payments for debt repayments and dividends.

Held for Trading Securities: Securities acquired specifically for resale, similar to inventories.

Cash Flows from Buying and Selling Held for Trading Securities: Classified as operating activities.

Loan Transactions of Financial Institutions: Classified as operating activities because they relate to the main revenue-producing activity of a financial institution.

Direct Method: Shows each major class of gross cash receipts and gross cash payments in the statement of cash flows.

Indirect Method: Adjusts profit or loss for the effects of non-cash items and changes in operating assets and liabilities.

Cash Basis of Accounting: Income is recognized only when collected, and expenses are recognized only when paid.

Noncash Transactions: Transactions that do not affect cash and cash equivalents.

Interests and Dividends: Entities may classify cash flows on interests and dividends as either operating or investing/financing activities, depending on the specific circumstances.

Dividend Paid: Classified as a financing activity because it is a transaction with the owners and alters the equity structure.

Bank Overdrafts: Those that cannot be offset to cash are presented as financing activities. Those that can be offset to cash form part of the balance of cash and cash equivalents.

Foreign Currency Cash Flows: Translated using the spot exchange rate at the date of the cash flow.

Exchange Differences: Not cash flows but are reported in the statement of cash flows to reconcile cash and cash equivalents at the beginning and end of the period.

Changes in Ownership Interests in Subsidiaries: Cash flows arising from acquisitions and disposals of subsidiaries resulting in loss or obtaining of control are classified as investing activities. Those that do not result in loss or obtaining of control are classified as financing activities.

Disclosure Requirements: PAS 7 requires disclosures about the components of cash and cash equivalents, significant cash and cash equivalents held by the entity that are not available for use by the group, and a management commentary.