Cash flows
Cash flows are inflows and outflows of cash and cash equivalents. A statement of cash flows groups them into operating, investing and financing activities and reconciles opening to closing cash and cash equivalents. Transfers within cash and cash equivalents do not create a cash flow for that statement, and transactions with no cash element are excluded from its cash totals.
Worked example
Paying $12,000 cash for equipment is an investing outflow; depreciation of that equipment is a non-cash expense.
Common mistake
A loan-funded asset acquired directly without cash passing through the entity is not a cash inflow and outflow merely to balance the statement.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | F3 | Direct | July 2027–August 2028 |
| ACCA | FA | Direct | September 2026–June 2027 |
| ACCA | FR | Direct | Official assessment-window verification pending |
| ACCA | K1 | Direct | July 2027–August 2028 |
| CIMA | BA3 | Direct | Official assessment-window verification pending |
| FIA | FFA | Direct | September 2026–June 2027 |