IAS 7 Statement of Cash Flows

IAS7 statement cash flows report allows a business entity to file a report of cash flows as an integral part of its primary financial statements. Cash flows are categorized into operating activities, investing activities or financing activities.

The main objective of IAS 7 is to allow the presentation of information on the historical changes in an entity’s cash and cash equivalents by means of cash flow statement. Which classify cash flows during the period according to operating, investing, and financing activities.

Operating activities: are the principle revenue generating operations of the company and other non-investing or funding operations.

Investing activities: are the principal revenue generating operations of the company and other non-investing or funding operations.

Financing activities: these are activities which lead to changes in the size and composition of entity’s contributed equity and borrowings.

IAS 7 statement of cash flow specifies how the changes will make in an entity’s cash and cash equivalents during the period. Cash comprises cash on hand and demand deposits. Cash equivalents are easily convertible and highly liquid investments which will have an insignificant risk of changes in value.

 

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