Discuss the requirement of IAS 7 in respect to preparation of cash flow statement for a...

Discuss the requirement of IAS 7 in respect to preparation of cash flow statement for a group.

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cash flow statement

the cash flow statement is an important primary statement that regulators and investors review carefully. It enables users to assess the ability of the entity to generate cash and its need to use that cash

IAS 7

IAS 7 is an accounting standard that establishes standards for cash flow reporting used in International Financial Reporting Standards

requirement of IAS 7 in respect to preparation of cash flow statement

The objective of IAS 7 is to require the presentation of information about the historical changes in cash and cash equivalents of an entity by means of a statement of cash flows, which classifies cash flows during the period according to operating, investing, and financing activities.

An entity shall prepare a statement of cash flows in accordance with the requirements of IAS 7 and shall present it as an integral part of its financial statements for each period for which financial statements are presented. The standard does not permit any exemption from the production of a statement of cash flows.

Key principles specified by IAS 7 for the preparation of a statement of cash flows are as follows:

operating activities are the main revenue-producing activities of the entity that are not investing or financing activities, so operating cash flows include cash received from customers and cash paid to suppliers and employees [IAS 7.14]
investing activities are the acquisition and disposal of long-term assets and other investments that are not considered to be cash equivalents [IAS 7.6]
financing activities are activities that alter the equity capital and borrowing structure of the entity [IAS 7.6]

ekkarill92 answered 4 months ago

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