Cash flow statements

Financial Statements form part of the financial reporting process. A complete set of financial statements normally includes a balance sheet, a profit and loss statement (or 'an income and expenditure statement' or 'income statement'), a cash flow statement and those schedules, notes, explanatory material and other statements that are an integral part of the financial statements. However, financial statements do not include such items as reports by directors, statements by the chairman, representation, discussion and analysis by the management and similar items that may be included in financial or annual reports. The Accounting Standards Board (ASB) of the Institute of Chartered Accountants of India (ICAI) has issued a conceptual framework, Framework for the Preparation and Presentation of Financial Statements, which deals with the matters relevant and relating to the financial statements and which is subject to revision from time to time on the basis of the experience of the ASB of working with it. In this paper, the matters relating to the cash flow statements, which normally forms a part of the financial statements of various enterprises to which the Accounting Standard (AS) 3, 'Cash Flow Statements', become mandatory, is discussed in the light of, and on the basis of, the said Accounting Standard.