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Notes/CA Intermediate/Accounting

CA Intermediate · Accounting

AS-3 Cash Flow Statement

Chapter 3 · 3 formulas · 4 exam-critical pointers

Core concepts

  1. 01Cash flows classified into Operating, Investing, Financing activities.
  2. 02Operating: principal revenue-producing activities (sales, payments to suppliers, taxes).
  3. 03Investing: purchase/sale of PPE, investments, loans given.
  4. 04Financing: capital raising, dividends paid, borrowing repayments.
  5. 05Direct vs Indirect method — only difference in operating section.

Flowchart summary

Cash Flow Statement | Operating -- Net Profit + non-cash + WC changes | Investing -- PPE, investments (in/out) | Financing -- Equity, debt, dividend | Net Change in Cash = Opening Cash + flows

Exam-critical pointers

  • ⭐Interest & dividend received: investing (general); operating (financial enterprises).
  • ⭐Income tax paid usually under operating unless specifically identifiable with investing/financing.
  • ⭐Non-cash transactions (bonus shares, asset swap) disclosed in notes — not in CFS.
  • ⭐ICAI typically asks 16-mark indirect method sum from comparative balance sheets.

Make it click

Formula sheet

  • Indirect: Operating CF = PBT + Non-cash items + Non-operating ± WC changes − Tax paid
  • Net Cash Flow = Operating + Investing + Financing
  • Closing Cash = Opening Cash + Net Cash Flow

More from Accounting

  1. Ch 1Framework for Preparation of Financial Statements & AS Overview
  2. Ch 2AS-2 Inventory Valuation
  3. Ch 4AS-14 Amalgamation
  4. Ch 5Accounts of Banking Companies
  5. Ch 6Branch Accounts
All CA Intermediate notes →
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