Page 79 - IC26 LIFE INSURANCE FINANCE

ACCOUNTING STANDARDS - 03

CASH FLOW STATEMENT

Definitions:

Cash comprises cash on hand and cash at bank. (Demand Deposits with bank)

Cash Equivalents are

Short Term

Highly Liquid Investments (Maturity around 3 months)

Subject to insignificant risk of changes in value.

Cash Flows are inflows and outflows of cash and cash equivalents.

Cash Flow Statement represents the cash flows during the specified period by operating, investing and

financing activities.

Operating Activities are the principal revenue-producing activities of the enterprise and other activities that

are not investing activities and financing activities.

Example:

1] Cash receipts from sales of goods/services

2] Cash receipts from royalties, fees and other revenue items

3] Cash payments for salaries, wages and rent

4] Cash payment to suppliers for goods

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