IAS 7 Statement of Cash Flows – Summary – PDF

IAS 7 Statement of Cash Flows – Summary – PDF

IAS 7 Full text Overview

IAS 7 statement of cash flows 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. Cash flows during the period are classified according to operating, investing, and financing activities.

Presentation of the IAS 7 Statement of Cash Flows

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  • Cash flows must be analyzed between operating, investing and financing activities.
  • For operating cash flows, the direct method of presentation is encouraged, but the indirect method is acceptable.
  • The following section will make you understand IAS 7 format with ias 7 amendment illustrative examples.
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Starts with:

  • Cash Flows from Operating activities:
    • Profit before tax
    • Adjustment for:
    • non-cash items
    • remove impact of accruals
    • relocate some figures to other position.
  • Cash Flows from Investing activities:
    • purchase of non-current assets
    • sale/disposal of non-current assets
    • interest received/dividend received on investment.

Cash Flows from Financing activities:

    • purchase of share
    • cash from shares
    • take loan/issue bonds
    • payment under finance lease agreement.
  • Cash Flows from Operating activities:
    • Receipts from customers
    • Less Payments to:
    • suppliers
    • employees
    • operating expenses
    • taxation
    • interest charges.
  • Cash Flows from Investing activities:
    • Same as indirect method.
  • Cash Flows from Financing activities:
    • Same as indirect method.

Accruals Based figures

Interest

  • Paid shown in Operating.
  • Received shown in Investing.

Dividend

  • Paid shown in Financing.
  • Received shown in Investing.

Taxation

Presentation Methods: Detailed Explanation

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Starts with:

Cash Flows from Operating activities:

  • Operating Profit after deducting interest but before tax.
  • Adjustment for:
    • non-cash items
    • depreciation/amortization (add back to profit)
    • gain on disposal of NCA (deduct)
    • Loss in disposal of NCA (add back)
    • remove impact of accruals
    • Interest expense (add back)
    • Interest income (deduct and relocate to Investing activities)
  • Movement on working capital item
    • Receivables (deduct increase, add decrease)
    • Payable (add increase, deduct decrease)
    • Inventory (deduct increase, add decrease)
    • Interest paid (deduct)
    • Taxation (deduct).

Cash Flows from Investing activities:

  • Purchase of non-current assets (deduct)
  • sale/disposal of non-current assets (add)
  • Payment for Investment (deduct)
  • Proceed from disposal of Investment (add)
  • interest received/dividend received on investment (add).

Cash Flows from Financing activities:

  • Purchase of share (deduct)
  • cash from shares (add)
  • take loan/issue bonds (add)
  • payment under finance lease agreement (deduct)
  • dividends payments (deduct).

Cash Flows from Operating activities:

  • Receipts from customers.
  • LESS: Payments to:
    • suppliers
    • employees
    • operating expenses
    • taxation
    • interest charges.

Cash Flows from Investing activities:

  • Same as indirect method.

Cash Flows from Financing activities:

  • Same as indirect method.

IAS 7 pdf (IAS 7 download)

The above IAS 7 summary is the most simplified version. Moreover, Click here to Download IAS 7 statement of cash flows pdf

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