シャドーイング練習: IAS 7 Statement of Cash Flows: Summary - applies in 2026 - YouTubeで英語スピーキングを学ぶ

The statement of cash flows is the only statement

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The statement of cash flows is the only statement

that ignores the accrual principle because all you need to report is real cash in or out.

So what do IFRS say about cash flows?

How should you report them?

Let's find out in this video about the summary of IRS 7 statement of cash flows.

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The statement of cash flows is an integral part of the financial statement

so you have to include statement of cash flows in your financial statements because otherwise they would not be complete.

What's the main benefit of it?

Why to prepare statement of cash flows?

Well, apart from the fact that it's obligatory.

Isn't the balance sheet and income statements efficient?

Well, the statement of cash flows shows the ability of any entity to generate cash.

So how does the generate cash?

By selling products or providing all services or by taking new loans?

And which one would you choose to invest in?

Well, that's obvious.

In general, the company that generates cash from operating activities wins, isn't it?

Now, the statement of cash flows is prepared always for certain periods.

So, for example, the year from 1st January to OX4 till 31st December to OX4.

So this statement should show you how the company generated cash and where the cash was spent over that period.

So in fact, it shows you the movement of cash and cash equivalents from 1st January till 31st December

to OX4 in this case.

And as every other component of financial statements,

also statement of cash flows must contain the same identification marks.

There must be a name of the reporting entity.

Then it must be clearly stated whether we look to the group or individual statement.

It must contain the title, statement of cash flows.

Then the period covered by the statement.

Finally, there should be stated what a reporting currency is and the rounding used in presentation of numbers.

So that is whether the figures are presented in thousands, millions, etc. Fine.

Now let me explain what comprises cash and cash equivalents.

It's slightly more complex than anyone would expect.

Obviously, cash and cash equivalents include cash,

which comprises of cash on hand,

basically petty cash, demand deposits,

current bank accounts including,

and cash equivalents are short-term highly liquid investments

that are readily convertible to known amount of cash

and they are not really subject to some significant changes in value

and investment would normally qualify for cash equivalent when it has short maturity

so no more than three months from the date of acquisition well what about shares

and equity investments well they are basically excluded from cash equivalents

with some exceptions for example preferred shares acquired within a short period of their maturity

and with specified redemption day

because preference shares are not really equity right cash flow statement excludes movements between items

that constitute cash or cash equivalents

because these are part of the cash management rather than part of the activities of the entity

so let's describe the statement of cash flows itself now is7 prescribed

that we should report cash flows in three main parts cash flows from operating activities cash flows from investing activities

and cash flows from financing activities now operating activities are the principal revenue producing activities

so other than financing and investing

and in my opinion this is the most important part perhaps

because it shows whether the operations of the entity generate enough cash to repay loans pay dividends

and make new investments without external money

so what transactions enter into this part cash receipts from sale of goods and rendering of services

cash receipts from royalties fees commissions and other revenues cash payments to suppliers of goods

and services and to and on behalf of employees cash payments

or refunds of income taxes unless they can be specifically identified with financing

and investing activities so here also other cash flows enter

and the operating part is probably the most complex one right investing activities represent the acquisition

and disposal of long-term assets and other investments not included in cash equivalents

and basically these are the cash payments to acquire property plan

and equipment intangibles and other long-term assets

and also proceeds from sale of these items fall here payments

to acquire all also most received from the sale of equity or debt instruments of other entities or interest in joint ventures.

Again, there's a little trick because if you buy some shares just to sell them later,

so you haul them for dealing or trading purposes,

it is an operating activity, not investing, right?

So be careful.

Then cash advances and loans made to other parties and receipts from their repayment.

Again, here trick is that if you're a financing institutions like bank,

this would fall into your operating activities, right?

Because providing loans is probably your main principal revenue generating activity.

Next, cash payments and receipts related to derivative contracts such as futures, forwards, options.

But again, if those are heard for trading,

then they are reporting under operating activities with the exception of hedging.

But let's not throw too many details on you here in this video.

Now, let's move to financing activities.

These are the activities that change the size and composition of the contributed equity and borrowings of the entity, right?

So, it's really how the business is financed.

First of all, cash payments to or receipts from equity owners.

well that relate to the issuance of new share

or their redemption belong here

so this is true also for other own equity instruments then

any sorts of cash receipts from issuing debentures taking loans notes bonds mortgages

and other short and long-term borrowings and also cash outflows from the repayment

or reported in this part finally lessees payments for the reduction of the outstanding lease liability enter into financing activities.

So now let's take a look how the statement of cash flows can be presented.

So here you're seeing the example of the real cash flow statement in the financial statement.

So first you can see that there are all identification data as required by IIS 1.

Yeah, because this is the requirement of IIS 1, not 7.

Name of the reporting entity CO stands for individual not group statement of cash flows period for

which statement is presented and of course presentation currency euro in this case

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and the level of rounding its thousands now the statement itself

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contains four parts first cash flows from operating activities second cash flows from investing activities third cash flows from financing activities.

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We have covered this in this video.

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And at the end there is always a reconciliation of cash

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and cash equivalents balance between the beginning and the end of the reporting period.

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So let's take a closer look to this reconciliation thing.

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First, there is a line effect of exchange rate changes on cash and cash equivalents.

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And this is the place where you report foreign exchange rate changes on cash and cash equivalents.

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For example, some forex gain or loss on bank accounts in foreign currencies.

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Then there is a line net increase could be also decrease in cash and cash equivalents.

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It is sum of results of all three parts operating, investing, and financing.

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And the other two lines represent balance of cash and cash equivalents at the beginning and at the end of period.

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Then IS7 requires disclosure of structure of cash and cash equivalents at the beginning and at the end of period.

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So this is some additional table you must include perhaps in the notes to the financial statements.

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And I'm showing you this table here.

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And I know that making cash flow statement can be a nightmare because it doesn't balance.

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Well, you're very welcome to check my other videos and articles on cpdbox.com and I actually teach the method,

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fail-proof method, that always gives you nice balanced statement of cash flows.

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Now let's take a look at two ways of reporting cash flows from operating activities.

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So you can do it either by direct method,

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here major classes of gross cash receipts and gross cash payments are disclosed,

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and indirect method where we start with a profit

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or lost before income tax and then we adjust it for non-cash items such as depreciation

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and it referrals or accruals of the past or future cash flows

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so you basically have a choice to do this either by direct method

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or by indirect method perhaps the easier method is indirect

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but some companies prefer direct because it gives you probably more relevant information well but you have the choice.

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Now let's take a look to investing and financing part.

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They are always the same whether you present operating activities by direct or indirect method.

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So cash receipts and cash payments from investing and financing activities shall be reported gross.

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So no netting off.

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So cash inflow is presented in one line

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and the cash outflow from the same activity in the other

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line for example you need to present purchases of equipment separately from proceeds from sale of

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equipment then a standard is 7-l leaves a few exceptions where you can report on a net basis

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or in one line for example

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when the entity makes some cash flows on behalf of its customers right

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and those reflect the activities of the customer rather than those of the entity

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so for example rents collected on behalf of

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and paid over to the owners of properties then also cash receipts

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and payments for items in which the turnover is quick the amounts are large

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and maturities are short for example credit card transactions in banks

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and then i must say

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that a financial institutions are special case themselves like banks these

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institutions are allowed to present more items on a net basis

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but we would be going into too many details in this video

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so my goal was just to give you the summary of is7 as applicable currently

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if you wish to learn more visit cpdbox.com

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and thank you for watching this video share it

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if you find it useful and don't forget to sign up to this channel and to my free newsletter on cpdbox.com

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Thanks for watching.

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Bye!

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