CMA Intermediate · Corporate Accounting and Auditing · Cash Flow Statement
Under AS 3 Cash Flow Statements, the cash flow statement should report cash flows during the period classified by which set of activities?
AS 3 requires cash flows during the period to be classified into operating, investing and financing activities. This three-way classification lets users assess the impact of each activity on the enterprise's financial position and on its cash and cash equivalents, so the other groupings are not prescribed.
- AOperating, investing and financing activitiesCorrect
- BRevenue, capital and contingent activities
- CProduction, selling and administrative activities
- DCurrent, non-current and extraordinary activities
Explanation
Paragraph 8 of AS 3 states that the cash flow statement should report cash flows during the period classified by operating, investing and financing activities. The other options are classifications used elsewhere in accounting but not in AS 3.
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