Question

Cash flow statement is prepared on the basis of _________ issued by Institute of Chartered Accountants of India. (AS-3/AS-3 Revised)

Hint:

AS-3 Revised provides detailed guidelines on how to prepare a cash flow statement, ensuring the correct classification of cash inflows and outflows.

Answer 1

Step 1: Understanding the Cash Flow Statement.
A cash flow statement is a financial statement that shows the movement of cash and cash equivalents within a company over a specific period. It helps stakeholders understand how a company generates and uses cash from operating, investing, and financing activities. The statement is crucial for assessing the company's liquidity and financial flexibility.
Step 2: AS-3 and AS-3 Revised.
The cash flow statement is prepared in accordance with AS-3 (Accounting Standard 3), which was issued by the Institute of Chartered Accountants of India. AS-3 defines the structure and components of a cash flow statement, including cash flows from operating activities, investing activities, and financing activities. - The original AS-3 standard was revised to clarify the treatment of certain transactions and provide better guidance on the presentation of cash flow statements. - The revised version of AS-3 is referred to as AS-3 Revised, which includes updates on how to classify and report cash flows under the revised guidelines.
Step 3: Conclusion.
The correct answer is AS-3 Revised, as it is the version of the standard currently used for preparing cash flow statements in India.