NCERT Class 12 Books Accountancy Part 2 Chapter 6- Cash Flow Statement

Safalta Expert Published by: Noor Fatima Updated Wed, 13 Jul 2022 11:27 AM IST

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Here is the information about NCERT Class 12 Books Accountancy Part 2 Chapter 6. You can give a read to this blog and get PDFs of the subject. 

NCERT Class 12 Books Accountancy Part 2 Chapter 6- Cash Flow Statement is accessible here for download purposes. You can download the PDF for and learn from the book anytime you want. Students who are studying in Class 12 and candidates who are preparing for competitive exams can download the PDF for NCERT Class 12 Books Accountancy Part 2 Chapter 6- Cash Flow Statement to learn from the reading material.  

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Here, you can learn the NCERT Class 12 Books Accountancy Part 2 Chapter 6- Cash Flow Statement. Moreover, you can get the links for other chapters to download the links. 

Table of Content
The starting of the Chapter
Glimpses of the Chapter
PDF Link


Cash Flow Statement Goes Like This-


LEARNING OBJECTIVES
  • After studying this chapter, you will be able to-
  • State the purpose and preparation of statement of cash flow statement
  • Distinguish between operating activities, investing activities and financing activities
  • Prepare the statement of cash flows using direct method
  • Prepare the cash flow statement using indirect method
Tiill now you have learnt about the financial statements being primarily inclusive of Position Statement (showing the financial position of an enterprise as on a particular date) and Income Statement (showing the result of the operational activities of an enterprise over a particular period). There is also a third important financial statement known as Cash flow statement, which shows inflows and outflows of the cash and cash equivalents. This statement is usually prepared by companies which comes as a tool in the hands of users of financial information to know about the sources and uses of cash and cash equivalents of an enterprise over a period of time from various activities of an enterprise. It has gained substantial importance in the last decade because of its practical utility to the users of financial information.  

Financial Statement of companies are prepared following the accounting standards prescribed in the companies Act, 2013. Accounting Standards are notified under section 133 of the Companies Act, 2013 vide Accounting Standards Rules, 2006 and are mandatory in nature. Companies Act, 2013 also specifies that if the accounting standards are not followed, financial statements will not be true and fair, which is a quality of financial statement. Financial Statements are defined in Companies Act, 2013 (Section 2 (40)] and includes Cash Flow Statement prepared in accordance with Accounting Standard- 3 (AS-3)- Cash Flow Statement.

A cash flow statement provides information about the historical changes in cash and cash equivalents of an enterprise by classifying cash flows into operating, investing and financing activities. It requires that an enterprise should prepare a cash flow statement and should present it for each accounting period for which financial statements are presented. This chapter discusses this technique and explains the method of preparing a cash flow statement for an accounting period


6.1 Objectives of Cash Flow Statement

A Cash flow statement shows inflow and outflow of cash and cash equivalents from various activities of a company during a specific period. The primary objective of cash flow statement is to provide useful information about cash flows (inflows and outflows) of an enterprise during a particular period under various heads, i.e., operating activities, investing activities and financing activities.

This information is useful in providing users of financial statements with a basis to assess the ability of the enterprise to generate cash and cash equivalents and the needs of the enterprise to utilise those cash flows. The economic decisions that are taken by users require an evaluation of the ability of an enterprise to generate cash and cash equivalents and the timing and certainty of their generation.


6.2 Benefits of Cash Flow Statement

Cash flow statement provides the following benefits -
  • A cash flow statement when used along with other financial statements provides information that enables users to evaluate changes in net assets of an enterprise, its financial structure (including its liquidity and solvency) and its ability to affect the amounts and timings of cash flows in order to adapt to changing circumstances and opportunities.
  • Cash flow information is useful in assessing the ability of the enterprise to generate cash and cash equivalents and enables users to develop models to assess and compare the present value of the future cash flows of different enterprises.
  • It also enhances the comparability of the reporting of operating performance by different enterprises because it eliminates the effects of using different accounting treatments for the same transactions and events.
  • It also helps in balancing its cash inflow and cash outflow, keeping in response to changing condition. It is also helpful in checking the accuracy of past assessments of future cash flows and in examining the relationship between profitability and net cash flow and impact of changing prices..


Some Glimpses of the Chapter are-







NCERT Class 12 Books Accountancy Part 2 Chapter 6- Cash Flow Statement- PDF Download

Part 2 Chapter 6- Cash Flow Statement-

Where can you download NCERT Class 12 Books Accountancy Part 2 Chapter 6 PDF?

Candidates can download NCERT Class 12 Books Accountancy Part 2 Chapter 6- Cash Flow Statement PDF for free on our page. Links are given below.

Part 2 Chapter 6- Cash Flow Statement-

Why is NCERT Class 12 Books Accountancy the finest study stuff?

The book can also help in clarifying doubts. Other benefits of studying from the NCERT Class 12 Books Accountancy are-
  • Students gain profound knowledge about Accountancy through the NCERT Books Class 12 Accountancy
  • The course books contain pictures that can help students in better understanding of the chapters
  • These books can help students in self-study

Are CBSE Books for Class 12 Accountancy important from an examination perspective?

The chapters in CBSE Books for Class 12 Accountancy are vital for board exams and higher classes. Students should read the chapter given in the CBSE books for Class 12 Accountancy. These stories and practice questions can help gain excellent marks.

To get outstanding marks, we provide mock test papers that can help gear-up your preparations for exams. Additionally, you can also download e-books to get yourself prepared even in a better way.
 
 

Why is NCERT Class 12 Books Accountancy so suggested for board exams?

Almost all the questions that appear in board exams are from NCERT Books Class 12 Accountancy. Moreover, a team of professional teachers drafts these books, which become a reliable source of study for students.
 

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