TITLE

CASH FLOW: WHEN THE FIDDLING HAS TO STOP

AUTHOR(S)
Loveday, Guy
PUB. DATE
June 1992
SOURCE
Accountancy;Jun92, Vol. 109 Issue 1186, p80
SOURCE TYPE
Trade Publication
DOC. TYPE
Article
ABSTRACT
The article deals with the first financial reporting standard (FRS1) called Cash Flow Statements of Great Britain's Accounting Standards Board and its preparation and interpretation. The key point to remember when preparing or interpreting a cash flow statement is that the statement only contains genuine cash flows rather than the more nebulous funds flows. As regards an enterprise's operating activities, FRS1 allows operating cash flows to be reported on a net or gross basis. With respect to acquisitions of subsidiaries, FRS1 requires that the cash flow statement shows the net cash flow in respect of the acquisition. Accordingly, FRS1 requires that reconciliations be presented in the notes to the cash flow statement for financing items and cash, but, perhaps surprisingly, not for investing activities. In time the preparation of group cash flow statements will become a routine exercise. The cash flow statement highlights a net inflow before financing of £180,000 and shows that £93,000 of this was used for debt and equity repayments, leaving an increase in cash of £87,000. Certainly it emphasises the importance of the notes to the statement. The draft profit and loss account, balance sheets and notes of Nero plc group as follows.
ACCESSION #
5996990

 

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