1. Cash Flow Cash flow is an accounting term that refers to the amounts of cash being received and spent by a business during a defined period of time, sometimes tied to a specific project.

3. 3 Steps to solve a Question Step 1: Prepare Adjusted Profit And Loss Account and find out Fund From Operation (FFO). Step 2: With the Help of FFO from Adjusted Profit And Loss Account, Calculate Cash From Operation (CFO). Step 3: With the help of CFO, finally calculate Cash Flow Statement (CFS) .

4. Step 1: Adjusted P/L A/C Take the profit as disclosed by the Profit and Loss A/c -------- Add: Those items that represent mere books entries without any payment or loss of cash, such as depreciation and amortisation of intangible assets (i.e., non-cash charges) and appropriation of profits such as dividend -------- Less: Profit arising out special transactions such as sale of fixed assets or redemption of liability -------- -------- Fund From Operation (FFO) -------- Particulars Amount (Rs.)

6. Step 2: Calculate CFO Particulars Amount (Rs.) Fund From Operation (FFO) -------- Add: Increase in Current Liabilities and Decrease in Current Assets -------- Less: Increase in Current Assets and Decrease in Current Liabilities -------- -------- Cash From Operation (CFO) --------

7. Step 3: Calculate CFS Sources (Inflow of cash) Amount (Rs.) Application (Outflow of cash) Amount (Rs.) Op. Bal. of cash ----- CFO ----- Cash from business Operations: Issue of Share Capital----- Issue of Debentures ----- Raising Loans ----- Sale of fixed Assets ----- Sale of Investments ----- Other miscellaneous Sources ----- ----- Meet Business Losses -----Purchase of Fixed Assets ----- Purchase of Investments ----- Repayment of Long-term Loans ----- Redemption of preference share ----- Payment of Dividend, etc. ----- Closing Bal. of Cash ----- ----- -----

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