CBSE Class 12 Cash Flow Statement

Scroll down to download pdf file

CBSE Basic Concepts for Class 12 Accountancy -Cash Flow Statement . Based on CBSE and CCE guidelines. The students should read these basic concepts to gain perfection which will help him to get more marks in CBSE examination.



Meaning : It is a statement that shows flow (inflow or outflow) of cash and cash equivalents during a given period of time. As per Accounting Standard3

(Revised) the changes resulting in the flow of cash & cash equivalents arises on account of three types of activities i.e.

(1) Cash flow from Operating Activities.

(2) Cash flow from Investing Activities.

(3) Cash flow from Financing Activities.

Cash : Cash comprises cash in hand and demad deposits with bank. 

Cash equivalents : Cash equivalents are shortterm higly liquid investment that are readily convertible into known amount of cash and which are subject to an insignificant risk of change in the value (of shotterm investment). Generally theses investment have a maturity period of less than three months.

Some example of cash equivalent : Bank overdraft, cash credit, shortterm deposits, maketable securities, treasury bills, commercial papers, money market funds (mutual fund), investment in preference shares if redeemable within three months and ensure that there is no risk of the failure of the company. Some type of transaction which are considered movement between cash and cash equivaletns are given below :

1. Cash deposited into bank.

2. Cash withdrawn from bank.

3. Sale of cash equivalent securities (e.g. sale of short term investment, sale of commercial papers)

4. Purchase of cash equivalent securities (e.g. Purchase of shortterm investment, Purchase of Treasury bills).

The above types of transaction are part of cash and cash equivaltens, so these are included in opening and closing cash and cash equivalent only. So these types of transanction not be included in cash from different activities like operating, investing, financing activities.

Preparation of cash flow statement :

Cash flow from operating activities _______

Cash flow from investing activities _______

Cash flow from financing activities _______

Net increase/decrease in cash & cash equivalent (Total of the above three activities) Add : Cash & Cash equivalent in the

beginning of the year (Given in opening balance sheet) _______

Cash & Cash equivalent at the end of the year _______

Note : The student should ensure that the cash & Cash equivalent at the end of the year as calculated above will be same as cash & cash equivalent given in closing balance sheet OBJECTIVES OF CASH FLOW STATMEMENT :

1. To ascertain how mach cash or cash equivalents have been generated or used in different activities i.e. operating/investing/financing activity.

2. To ascertain the net changes in cash and cash equivalents.

3. To assesss the causes of difference between actual cash & cash equivalent and related net earning/income.

4. To help in formulation of financial policies such as dividend policy, fixed assests policy, capital structure related policy.

5. To help in shortterm financial planing.

6. To ascertain the liquidity of enterprises


1. Non cash transaction are not taken into consideration like sahres or debentures issued to vendores, deprecaition charged during the year.

2. It is a statement related with past data.

3. It is not used for judging the profitability of enterprises.

4. Accrual accounting concept is ignored in this statement e.g. credi sales, credit purchases, outstanding expesnes, accrued income are not included. Computation of Cash flow from different activities.

(1) Cash flow from operating activities : operating activities are the main revenue generating activities of the enterprises. It includes tha transaction also which are not included in investing and financing activities. Accounting standard 3 (Revised) has suggested two methods of computing net cash from operating activities (A) Direct Method (B) Indirect Method. (C) Indirect Method of calculating the cash flow from Operating Activities :

Under this method Net Profit Before Tax and Extraordinary Item is the starting point further calculations.

Calculations of Net Profit Before Tax Extra ordinary Item :

Difference between closing balance and opening balance of profit & loss A/c ____

Add : 1. Proposes divident for current year ____

2. Interim Divident paid during the year. ____

3. Profit Transferred to Reserve

(If reserve of current year increased from previous year) ____

4. Provision for Taxation made durning the year ____

Less : 1 Refund of Tax credited to P & L A/c ____

2. Extraordinary item if any Credited to P & L A/c ____

Net Profit Before Tax and Extraordinary Item Extraordinary items : These items are not related to normal business operation and not included in investing and financing activities

Please refer to attached file for CBSE Class 12 Cash Flow Statement

Click on the text For more study material for Accountancy please click here - Accountancy

Latest CBSE News

  • CBSE declared few days back that class 10 Mathematics examination will not be conducted inspite of strong rumours that the Mathematics board exams paper was leaked hours before the examination and was circulated widely in Delhi and Punjab region. The details behind the decision taken by CBSE have now come to light. CBSE had on random basis selected answer sheets of 1000 students across Delhi,...
  • The problems faced by CBSE board during the current ongoing board exams for class 10 and class 12 doesn’t seems to end. The investigations for the major paper leak for class 12 is still going on with students agitating and filing cases in SC against the re-conduct of examinations. Now due to Bharat Bandh organized in Punjab by various Dalit Organizations all schools and public transport systems...
  • CBSE has issued a notification to all schools regarding re-conduct of Class 12 Economics Paper and class 10 Mathematics paper Exams to be re-conducted Class 12 – Economics (Code 030) Class 10 – Mathematics (Code 041) There were reports that the examination papers for the above mentioned subjects were leaked prior to the exam. Also it has come to notice post investigation that hand written paper...
  • CBSE has issued the following notification relating to the paper leak issues and importance of conducting re-examinations. Read the notification/ letter to students and parents below: On  30th  March 2018,  the Board  issued  a Notification  stating  that  the  re-examination  for  Maths  class  X would be conducted in the State of Delhi NCR and Haryana, if considered necessary after inquiry ...
  • CBSE board is in the process of making major changes in the syllabus for all classes according to which NCERT books will be revised. The new NCERT Books will be applicable from next year. In continuation to the changes being made, it has now been decided that QR codes will be printed on new set of NCERT Textbooks which will be issued in 2019. Students will be able to scan the QR code using their...
  • Read the statement by CBSE below- Subsequent to the false news circulated on various media platforms on 11.04.2018 alleging that some questions in JEE (Main) 2018 Exam were identical to 2016 mock test of Narayana Coaching Academy, CBSE issued a detailed clarification yesterday (11.04.2018) itself to all media debunking the false news after thorough enquiry into the matter. While it is established...
  • The Board's Class  X/XII Examinations scheduled on 02.04.2018 could not be conducted in the State of Punjab due to Bharat Bandh and had to be cancelled. It has now been decided to conduct the above said cancelled examinations  on 27'" April 2018 (Friday) for candidates of the State of Punjab for Class X/XII. 2018. Following is the schedule for conduct of Examination : Friday, 27'" April,2018 - 10...