Introduction:In the presence of Balance sheet and profit and Loss account statements why there is a need of cash

flow statement? This is an interesting question and it is also related with the historical background of the cash flow statement. The both stated financial statements i.e. Balance sheet and income statement are prepared on the accrual basis while cash flow statement is made on the actual cash receipts and cash payments. All these statements are prepared with the same accounting data but the purposes of all these statements are different. Cash flow statement is an effective tool to measure the effective management of working capital by any entity e.g. If the cash flow from operating activities are equal and greater than the profit of that period then it is clear indication that the working capital is Sufficiently and well managed if the result are adverse then the management must have to take some serious and important steps for the improvement of operating activities. Where did you obtain cash/funds? The cash generated from the revenue of the company this cash is used in running different operations of the business. Cash flow is used to determine and describe the entity financial success, the activities and the future cash flows. Cash flow statement is an important and integral part of financial statement. A well formed structure is used not to consider only financial ratios but also make a comparison between different companies. In cash flow statement accrual accounting is not used. Cash flow statement is important for decision making e.g. investor wants to know about future cash flow of its investment.

Definitions:
Cash flow statement, Statement of cash flow and statement of fund flow is a statement which shows the actual cash in and cash out of the business and also the nature of the cash and cash equivalents for the particular period of time. Cash in Cash out : Cash coming into the business : Cash going to the business

Cash equivalent : Cash equivalent are short term investments easily Converted into cash such as securities, treasury bills etc. Cash flow statement is the financial statement which shows how changes in the balance sheet account and income statement account affect the cash and cash equivalents. Cash flow statement divided into three main parts. These important parts are: Cash form operating activities. (CFO) Cash from investing activities. (CFI) Cash from financing activities. (CFF) Cash Flow Statement = CFO+CFI+CFF Cash flow from operating activities come first then investing and at the last financing activities is recorded.

Cash From Operating Activities (CFO):These include production of sales and delivery of goods and services, receiving cash from customers and making payment to raw material advertising wages and interest. Under IAS-7 operating activities includes. 1. Receipt against sales of goods and services. 2. Buying merchandise. 3. Payments to employees. 4. Payment to suppliers. 5. Interest received on loan

Cash From Investing Activities (CFI):Investing activities includes purchase and sale of long term assets and securities and also making the collection of loans. Some examples of investing activities are: 1. Long term investments. 2. Land. 3. Building. 4. Equipments. etc.

Cash from Financing Activities (CFF):-

Financing activities which is impact on long term liabilities and equity of the firms and dividend paid is also including in this category. Some Example of Financing activities are: 1. Bonds Payable. 2. Notes Payable. 3. Common Stock. 4. Preferred Stock. etc.

Historical Background:FASB (Financial Accounting Standard Board) in 1971, under GAAP (Generally Accepted Accounting Principles) made a compulsory to tell the stake holders about the source and the uses of funds in form of report which was not particularly named. FASB in 1987, according to statement No.95 (FAS 95) made it Compulsory that companys issue cash flow statement. IASB (International Accounting Standard Board) in 1992, issue a standard with the name of IAS-7 as cash flow statement. In 1994, IASB made it mandated to firms for issue cash flow statement with other financial statement reports.

Objective of the study:The study and research purpose is to: The structure of cash flow statement. The accounting method of cash flow statement. To understand the operating, investing and financing activities. Interested group of person. Concerns of the cash flow statement.

Interested Group of Persons:The interested groups of people related with cash flow statement are: Share holders. Suppliers.

Banks. Analysts. Potential Lenders, Investors and Employees. Accounting Personnel who wants to know whether the company has sufficient cash balance to pay the payrolls and the immediate expenses.

Concern of Cash Flow statement:Cash flow statement has many important concerns which are as: 1. Provide toll to evaluate the liquidity, solvency and the financial stability of the business. 2. Provide detail of total of cash inflow and outflow which is not provided by income statement and balance sheet. 3. Cash flow statement is the indicator of future cash flow. 4. The qualitative aspect of the profit. Mean what portion of profit represents cash inflows. 5. Evaluate the business position to pay the dividend, staff salaries and the supplier invoices. 6. Provide the data to calculate the internal rate of return 7. User can understand that the business expansion is due to external funds financed or due to cash generated from operating activities.

Need for cash flow statement:For any business it is important to ensure that Sufficient profit are made to finance the business activities Sufficient cash fund are available as and when needed

Problem Statement:The problem statement of the my research topic is CASH FLOW STATEMENT, ITS ACCOUNTING AND STRUCTURE.

Research Question:The research question related with thesis is as: The total cash flow from all the activities is equal to the net cash balance in hand How was the expansion in plant and equipment financed What use was made of net income Where did you obtained funds How much required capital is generated internally Is the dividend policy in balance with its operating policy How much debt was paid off How much was received from the issuance of stock How much debt financing was taken out

Nature of research:-

I have made the research on the qualitative approach. This research is based in most of the theoretical part as by keeping the research topic in mind i.e. cash flow statement, its Accounting and structure. Variables:There are two types of variable i.e. Direct Variable Indirect Variable Variables are important part for the research point of view. Dependent Variable:The dependent variable of Cash Flow Statement is: The Total Cash Balance in Hand The total Cash is direct variable because it is directly related and affected by all other cash activities. The total cash Balance in hand means the sum of cash and bank balances and the cash equivalents. Independent Variable:The impact of change in independent variables is the changes in dependent variables and the result is changing in whole research problem so, dependent variables are changes when independent variables are changes. These are three variables are indirect/independent variables and the changes are made in these variable which is affected the whole cash flow statement. Cash From Operating Activities (CFO) Cash From Investing Activities (CFI) Cash From Financing Activities(CFF)