Page 111 - DCOM302_MANAGEMENT_ACCOUNTING

Management Accounting

Notes (h) cash receipts from future contracts, forward contracts, option contracts and swap contracts
except when the contracts are held for dealing or trading purposes, or the receipts are
classifi ed as fi nancing activities.

Did u know? When a contract is accounted for as a hedge of an identifi able position, the
cash flows of the contract are classified in the same manner as the cash flows of the position

being hedged.
Figure 6.2: Diagrammatic Presentation of Cash Flow from Investing Activities
Cash Flow

Cash Inflow Cash Outflow

Disposal Disposal Receipts Receipts
of Fixed of Shares of Repayment from Future
Assets & Warrants of Advances Contracts
& Loans

Purchase of Purchase of Advances & Payment to
Fixed Assets Shares, Loans to Future
Warrants Third Parties Contracts

6.2.3 Cash Flow from Financing Activities

Under financial activities those activities are included which are relating to the size and
composition of capital (equity and preferences) and borrowing or loans. As per AS-3 (revised), the

separate disclosure of cash flows arising from financing activities is important because it is useful

in predicting claims on future cash flows by providers of funds (both capital and borrowings) to

the enterprise. Examples of cash flows arising from financing activities are:

(a) cash proceeds from issuing shares or other similar instruments;
(b) cash proceeds from issuing debentures, loans, notes, bonds and other short or long-term
borrowings; and
(c) cash repayments of amounts borrowed.
Figure 6.3: Diagrammatic Presentation of Cash Flow from Financing Activities

Cash Flow

Cash Inflow Cash Outflow

Issue of Shares Issue of Debentures Raising of
(equity & preference long-term loans
loan, bonds, etc.)

Redemption of Repayment of Payment of Payment of
preference shares loans interest dividends and bonds

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