GRY

Financial reporting - International Financial Reporting Standards (IFRS).

International Accounting Standard 7, dealing with statement of cash flows.

IAS 7 prescribes how to present information in a statement of cash flows about how a reporting entity’s cash and cash equivalents changed during the financial reporting period under review.

IAS 7 is issued by the International Accounting Standards Board.

Direct method of presentation is encouraged

"An entity shall report cash flows from operating activities using either:

(a) the direct method, whereby major classes of gross cash receipts and gross cash payments are disclosed; or

(b) the indirect method, whereby profit or loss is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments, and items of income or expense associated with investing or financing cash flows.

Entities are encouraged to report cash flows from operating activities using the direct method.

The direct method provides information which may be useful in estimating future cash flows and which is not available under the indirect method."

IAS 7 - paragraphs 18 and 19.

See also

• ASC 230
• Cash
• Cash equivalents
• Cash flow
• Cash flow statement
• Direct method
• Financial reporting
• FRS 102
• Indirect method
• International Accounting Standards Board
• International Financial Reporting Standards
• Reporting entity
• Statement of cash flows

Other resources

• IAS 7 - IAS Plus
• IAS 7 text - IFRS