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90 Corporate Finance BRILLIANT’S

statement. However, in recent years more âbmo ñQ>oQ>_|Q> H$mo \§$S²>g âbmo ñQ>oQ>_|Q> go A{YH$ _hÎd
importance is given to cash flow statements {X`m Om ahm h¡Ÿ& H$B© AH$mCpÝQ>¨J ñQ>¢S>S>²©g, H$ån{Z`m|
rather than fund flow statements. Many of Ho$ gm_Zo H¡$e âbmo ñQ>oQ>_|Q> V¡`ma H$aZo H$s _m§J aIVo
the accounting standards require companies
to prepare cash flow statements. Many users h¢Ÿ& H$B© Cn^moº$m `h OmZZm MmhVo h¢ {H$ \$_© {H$g àH$ma
would like to know as to how the firm H¡$e Ho$ òmoV CËnÞ H$aVr h¡ Am¡a `h ^r {H$ {deof
generated the cash resources and as to how it g_`-gr_m _| `h BZ òmoVm| H$m {H$g àH$ma Cn`moJ H$aVr
applied such resources during a given period. h¡Ÿ& Eogo àíZm| H$m CÎma BÝH$_ ñQ>oQ>_|Q> `m ~¡b|g erQ>
The answers to such questions can be
obtained only from cash statement and not go àmá Zht hmoVm h¡ ~pëH H¡$e âbmo ñQ>oQ>_|Q> go àmá
from income statement or balance sheet. hmoVm h¡Ÿ&

Meaning AW©
Cash flow statement is a statement which H¡$e âbmo ñQ>oQ>_|Q> EH$ Eogm ñQ>oQ>_|Q> h¡ {Og_| {H$gr
describes the inflows (sources) and outflows {ZpíMV Ad{Y _| {H$gr B§Q>aàmBO _| H¡$e Ed§ H¡$e
(uses) of cash and cash equivalents in an
enterprise during a specified period of time. In BpŠddob|Q> Ho$ BZâbmoO Ed§ AmCQ>âbmoO H$m dU©Z {H$`m
simple terminology, the statement exhibits the OmVm h¡& gac eãXm| _|, Bg ñQ>oQ>_|Q> _| H¡$e Ho$ gmog©
information about sources and application of
Ed§ CgHo$ Cn`moJm| Ho$ gå~ÝY _| gyMZmE± àXmZ H$s OmVr
funds. In brief, it is a summary of cash book of
h¢Ÿ& g§úmon _| `h Am°J}ZmBOoeZ H$s H¡$e ~wH$ H$m ì`dpñWV
an organization presented in a systematic
manner. This statement is one of the tools for gmam§e h¡Ÿ& `h B§Q>aàmBO H$s {bpŠd{S>Q>r Ed§ gm°ëdoÝgr
assessing the liquidity and solvency position nmo{OeZ H$mo Om§MZo H$m CnH$aU h¡Ÿ&
of the enterprise.

Definition n[a^mfm
"A cash flow statement is a financial ""H¡$e âbmo ñQ>oQ>_|Q> EH$ \$m`ZopÝe`b ñQ>oQ>_|Q> h¡
statement that summarizes the cash receipts and {Og_| {H$gr {ZYm©[aV Ad{Y _| {H$gr B§Q>aàmBO H$s
payments and net change resulting from operating, Am°naoqQ>J, \$m`ZopÝg§J VWm BÝdopñQ>¨J EpŠQ>{dQ>rO go H¡$e
financing and investing activities of an enterprise H$s àm{ßV`m| Ed§ CZHo$ ^wJVmZ go g~pÝYV ñQ>oQ>_|Q> àñVwV
during a given period of time."
{H$`m OmVm h¡Ÿ&''
Applicability Cn`mo{JVm
This standard applies to the following `h ñQ>¡ÊS>S>© {ZåZ{c{IV B§Q>aàmBOog na cmJy
enterprises: hmoVm h¡:
(i) Which has turnover more than ` 50 (i) EH$ \$m`ZopÝe`b B©`a _| {OZH$m Q>Z©Amoda ` 50
crores in a financial year. H$amo‹S> go Á`mXm hmoŸ&

(ii) The companies listed on Stock Exchange. (ii) ñQ>m°H$ EŠgM|O _| {bñQ>oS> H§$nZrOŸ&
Note: Cash flow statements of listed ZmoQ>… Ü`mZ XoZo `mo½` h¡ {H$ {bñQ>oS> H§$nZrO AS -3 _|
companies shall be presented only under the Xr JB© Ho$dc BZS>m`aoŠQ> _oWS> Ho$ Ûmam hr H¡$e âbmo
indirect method as prescribed in AS-3. Other
enterprises may either use the direct or indirect ñQ>oQ>_|Q> V¡`ma H$a gH$Vr h¢Ÿ& O~{H$ AÝ` B§Q>aàmBOog