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2012•Unpublished venueRequires access

IAS 7 Statement of Cash Flows

Dieter Christian, Norbert Lüdenbach

Open publisher page 8 citations

Abstract

This chapter discusses the IAS 7 statement of cash flows. A statement of cash flows is a mandatory part of the financial statements. Cash flows are inflows and outflows of cash and cash equivalents. Cash comprises demand deposits and cash on hand. Cash equivalents are short term, highly liquid investments which are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. It is found that an investment normally qualifies as a cash equivalent only when it has a short maturity of, say, three months or less, from the date of acquisition. Equity investments are normally excluded from cash and cash equivalents. Bank overdrafts that are repayable on demand are included as cash and cash equivalents to the extent that they form an integral part of the entity's cash management.

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What this paper is about

This chapter discusses the IAS 7 statement of cash flows. A statement of cash flows is a mandatory part of the financial statements. Cash flows are inflows and outflows of cash and cash equivalents. Cash comprises demand deposits and cash on hand. Cash equivalents are short term, highly liquid investments which are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. It is found that an investment normally qualifies as a cash equivalent only when it has a short maturity of, say, three months or less, from the date of acquisition. Equity investments are normally excluded from cash and cash equivalents. Bank overdrafts that are repayable on demand are included as cash and cash equivalents to the extent that they form an integral part of the entity's cash management.

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Available abstract

This chapter discusses the IAS 7 statement of cash flows. A statement of cash flows is a mandatory part of the financial statements. Cash flows are inflows and outflows of cash and cash equivalents. Cash comprises demand deposits and cash on hand. Cash equivalents are short term, highly liquid investments which are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. It is found that an investment normally qualifies as a cash equivalent only when it has a short maturity of, say, three months or less, from the date of acquisition. Equity investments are normally excluded from cash and cash equivalents. Bank overdrafts that are repayable on demand are included as cash and cash equivalents to the extent that they form an integral part of the entity's cash management.

Key concepts: Cash flow statement, Cash and cash equivalents, Cash on cash return, Operating cash flow, Cash management, Cash flow forecasting, Cash, Business

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