(Summary) Ind AS 7

Statement of Cash Flows

Cash Flow is useful

  • To assess the ability to generate cash flows
  • To assess needs to utilise those cash flows
  • To help the user to take decisions

Cash Flow is prepared in accordance with Ind AS 7 and it is an integral part of FS.

All entities must present statement of cash flows.

  i.    Cash ii.    Cash Equivalent
iii.    Cash Flows iv.    Operating Activities
v.    Investing Activities vi.    Financing Activities

Cash Equivalent: Short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

  • It enables users to evaluate the changes in net assets of an entity, its financial structure etc.
  • It helps in assessing the present value of future cash flow.
  • It eliminates the effects of using different accounting treatments for the same transactions and effects.
  • Held for the purpose of meeting short-term cash commitments.
  • Readily convertible to a known amount of cash and be subject to an insignificant risk of changes in value.
  • It has a short maturity.
  • Equity investments are excluded, unless they are, in substance, cash equivalents.

Report cash flows during the period classified by

  1. Operating,
  2. Investing, and
  3. Financing activities

For eg. Cash receipts and payments for items in which the turnover is quick, the amounts are large, and the maturities are short.

For eg. Cash advances and loans made to customers and the repayment of those advances and loans.

  1. Account for foreign exchange differences as per Ind AS 21
  2. However, foreign exchange differences on cash and cash equivalent needs special attention.
  3. Such differences on cash and cash equivalents shall be shown separately from operating, investing, and financing activity.

Classify depending on its nature

Interest paid- disclose in despite of Capitalisation.

Classify if separately identifiable

Those taxes which can’t be separately identifiable and all taxes related to operating activity (whether separately identifiable or not) are to be shown under Operating Activity section.

Restrict its reporting in the statement of cash flows to the cash flows between itself and the investee.


  1. Cash flows in respect of investments in Associate/ JV,
  2. Distributions between it and associate/ JV, and
  3. Other Payments/ Receipts between it and associate/ JV
  1. Separately present cash flow from obtaining/ losing control as Investing Activity.
  2. Cash flows on losing control are not deducted from those on obtaining control (thus, present separately)
  3. Change in Ownership Interest but No Loss of Control = Financing Activity (for entities other than Investment entity)
  • Disclose the components of cash and cash equivalents and shall present a reconciliation of the amounts in its statement of cash flows with the equivalent items reported in the balance sheet
  • Discloses the policy which it adopts in determining the composition of cash & cash equivalents

Please Note – Exclude Non-Cash Transactions


Use Ind AS Lab Services

Contact Us

Send us an email and we'll get back to you, asap.

Not readable? Change text.