IAS 7 Statement of Cash Flows – Summary – PDF

IAS Standards

IAS 2 Inventories       

IAS 7 Statements of cash flows

IAS 7 Statement of cash flows  – Revisited

IAS 8 Accounting policies, changes in accounting estimates, and errors

IAS 10 Events after the reporting period       

IAS 12 Income taxes 

IAS 16 Property, plant and equipment          

IAS 17 Leases

IAS 19 Employee benefits     

IAS 20 Accounting for government grants and disclosure of government assistance          

IAS 21 The effects of changes in foreign exchange rates     

IAS 23 Borrowing costs        

IAS 24 Related party disclosures

IAS 27 Consolidated and separate financial statements        

IAS 28 Investments in associates and joint ventures 

IAS 32 Financial instruments: presentation  

IAS 33 Earnings per share

IAS 33 Earnings per share – Revisited          

IAS 36 Impairment of assets 

IAS 37 Provisions, contingent liabilities and contingent assets        

IAS 38 Intangible assets

IAS 40 Investment property

IFRS Standards

IFRS 3 Business combinations    

IFRS 5 Non-current assets held for sale and discontinued operations    

IFRS 7 Financial instruments: disclosures          

IFRS 8 Operating segments         

IFRS 9 Financial instruments      

IFRS 10 Consolidated financial statements        

IFRS 11 Joint arrangements         

IFRS 12 Disclosure of interests in other entities 

IFRS 13 Fair value measurement 

IFRS 15 Revenues from contracts with customers          

IFRS 16 Leases

IAS 17 VS IFRS 16 Lease – Differences

Ratio Analysis

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

Statement of Cash Flows

• 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.

Indirect Method

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.

Direct Method

• 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

• Includes Tax expense.
• Includes Deferred Tax.

Presentation Methods: Detailed Explanation

Statement of Cash Flows



Indirect Method

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).

Direct Method

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

External Resources

• Accounting Standard
• FASAB
• IFRS
• GAAP