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Cash flows are grouped in the of Cash Flow statement as per IND AS - 3 into which of the following major categories?  

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UGC NET Paper 2: Management 16th June 2023 Shift 1
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  1. Cash receipts, cash disbursements and non-cash activities  
  2. Direct cash flows and indirect cash flows 
  3. Operating activities, investing activities and collection activities 
  4. Operating activities, investing activities and financing activities 

Answer (Detailed Solution Below)

Option 4 : Operating activities, investing activities and financing activities 
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UGC NET Paper 1: Held on 21st August 2024 Shift 1
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The correct answer is Operating activities, investing activities and financing activities.

Key Points Cash flows are grouped in the Cash Flow Statement as per IND AS - 3 into the following major categories:

  • Operating activities: These are the cash flows from the principal revenue-producing activities of the entity and from other activities that are not investing or financing activities.
  • Investing activities: These are the cash flows from the acquisition and disposal of long-term assets and other investments not included in cash equivalents.
  • Financing activities: These are the cash flows from the raising and repayment of capital and from other activities that result in changes in the entity's liabilities and equity, other than those arising from operating activities.

Additional Information 

Category Types of Cash Flows Operating activities Cash receipts from customers, cash payments to suppliers, cash payments to employees, cash payments for taxes, and other cash flows that are not investing or financing activities. Investing activities Cash payments to acquire property, plant, and equipment, cash receipts from the sale of property, plant, and equipment, cash payments to acquire investments, cash receipts from the sale of investments, and other cash flows that involve the acquisition or disposal of long-term assets. Financing activities Cash receipts from issuing shares, cash payments to repurchase shares, cash payments to redeem debt, cash receipts from issuing debt, and other cash flows that involve changes in the entity's liabilities and equity.

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