Class 12 Accountancy - BIHAR
Cash Flow Statement
The chapter 'Cash Flow Statement' in Class 12 Accountancy under the Bihar School Examination Board (BSEB) focuses on tracking the inflow and outflow of cash and cash equivalents within a business enterprise. As per Accounting Standard-3 (AS-3), it categorizes business activities into Operating, Investing, and Financing activities. This chapter is highly scoring and holds immense importance for board exams, frequently featuring an 8-mark or 6-mark practical long-answer question where students must prepare a complete cash flow statement from comparative balance sheets.
Start Learning FreeKey Concepts
Operating Activities
Principal revenue-producing activities of the enterprise, such as cash receipts from the sale of goods and payments to suppliers and employees.
Investing Activities
Acquisition and disposal of long-term assets and other investments not included in cash equivalents, such as the purchase or sale of machinery and land.
Financing Activities
Activities that result in changes in the size and composition of the owner's capital and borrowings of the enterprise, such as issuing shares or paying dividends.
Cash and Cash Equivalents
Comprises cash on hand, demand deposits with banks, and short-term, highly liquid investments that are readily convertible to known amounts of cash.
Non-Cash Items
Expenses or incomes like depreciation and goodwill written off that do not involve any actual flow of cash and must be adjusted in net profit.
Important Formulas
Board Exam Info
In the BSEB Class 12 Accountancy board exam, the Cash Flow Statement chapter typically carries around 8 to 12 marks. Students can regularly expect one compulsory long numerical question of 6 or 8 marks, along with 1 to 2 objective/multiple-choice questions asking to classify specific transactions into operating, investing, or financing activities.
Frequently Asked Questions
Is Cash Flow Statement the same as Income Statement?
No, an Income Statement (Profit and Loss A/c) shows the profitability of a business on an accrual basis, whereas a Cash Flow Statement shows the actual movement of cash and cash equivalents.
How do we treat proposed dividend in cash flow statements?
The current year's proposed dividend is added back to net profit before tax and then shown as an outflow under financing activities when paid.
Are bank overdrafts treated as bank borrowings?
Yes, bank overdrafts and cash credits are generally treated as financing activities and included as part of cash equivalents only if they form an integral part of cash management.
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