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Method of Cash Flow Statement - CA Inter Online Classes/CA Inter Pen-Drive Classes


Method of Cash Flow Statement - Operating Activity, Investing Activity, and Financial Activity - CA Inter Online Classes


The Method of Cash Flow Statement - Cash Flow Statements (CFS) in accordance with CA Inter ICAI Latest Syllabus. Two methods are used to calculate cash flow from operating activities: indirect and direct, which both produce the same result. Direct Method: This method draws data from the income statement using cash receipts and cash disbursements from operating activities.

Method of Cash Flow Statement divided into three parts -

1.Operating Activity -

Operating Activity - Cash flows from operating activities is a section of a company's cash flow statement that explains the sources and uses of cash from ongoing regular business activities in a given period. This typically includes net income from the income statement, adjustments to net income, and changes in working capital.

2.Investing Activity - 

Cash flow from investing activities is a section of the cash flow statement that shows the cash generated or spent relating to investment activities. Investing activities include purchases of physical assets, investments in securities, or the sale of securities or assets.
 
3.Financial Activity - 

The financing activity in the cash flow statement focuses on how a firm raises capital and pays it back to investors through capital markets. These activities also include paying cash dividends, adding or changing loans, or issuing and selling more stock.

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