What traumatic event does Zitkala-Sa describe at the school?

The forcible cutting of her long hair

Why was the cutting of her hair so humiliating to Zitkala-Sa?

Among her people, shingled hair was worn by cowards and mourners

What is a cash flow statement?

It is a statement that shows the inflows and outflows of cash and cash equivalents over a period, classified into operating, investing and financing activities.

Under which standard is the cash flow statement prepared?

It is prepared in accordance with Accounting Standard 3 (AS-3), notified under Section 133 of the Companies Act 2013.

Into which three activities are cash flows classified?

Operating activities, investing activities and financing activities.

Name the two methods of computing cash flow from operating activities.

The direct method and the indirect method.

What does the indirect method start with?

It starts with net profit before tax and adjusts it for non-cash and non-operating items and for changes in working capital.

What are cash equivalents?

Short-term, highly liquid investments that are readily convertible into known amounts of cash and subject to insignificant risk of change in value.

Why is a cash flow statement useful?

It helps users assess the enterprise's ability to generate cash and cash equivalents and to evaluate its liquidity and solvency.

Cash Flow Statement

Q: What are operating activities?

The principal revenue-producing activities of the enterprise and other activities that are not investing or financing activities.

Class 12 Accountancy · Accountancy Part II · Chapter 6

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Summary

A cash flow statement is the third important financial statement, alongside the position statement (balance sheet) and the income statement, and shows the inflows and outflows of cash and cash equivalents over a period. It is prepared in accordance with Accounting Standard 3 (AS-3), which is notified under Section 133 of the Companies Act 2013 and is mandatory for the companies to which it applies. The statement explains the historical changes in cash and cash equivalents by classifying cash flows into three activities: operating, investing and financing. Operating activities are the principal revenue-producing activities of the enterprise and other activities that are not investing or financing; cash flow from operations may be determined by the direct method or the indirect method, the latter adjusting net profit for non-cash and non-operating items and for changes in working capital. Investing activities relate to the acquisition and disposal of long-term assets and investments, such as the purchase or sale of fixed assets. Financing activities relate to changes in the size and composition of the owners' capital and borrowings, such as the issue of shares or debentures and the repayment of loans. The net effect of all three activities, added to the opening balance, gives the closing balance of cash and cash equivalents, helping users judge the firm's ability to generate cash and to meet its obligations.

Meaning and objectives of cash flow statementCash and cash equivalents under AS-3Operating, investing and financing activitiesDirect and indirect methodsPreparation and uses of the statement

Key terms

Cash Flow Statement

A statement showing the inflows and outflows of cash and cash equivalents during a period, classified into operating, investing and financing activities.

Cash Equivalents

Short-term, highly liquid investments readily convertible into known amounts of cash with insignificant risk of change in value.

Operating Activities

The principal revenue-producing activities of an enterprise and other activities that are not investing or financing.

Investing Activities

Activities relating to the acquisition and disposal of long-term assets and investments.

Financing Activities

Activities that change the size and composition of the owners' capital and borrowings of the enterprise.

AS-3

Accounting Standard 3 on Cash Flow Statement, notified under the Companies Act 2013, which governs the preparation of the statement.

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A cash flow statement shows:

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Cash Flow Statement

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