## Cash Flow Statement – Overview and Structure (AS 3)

### What is a Cash Flow Statement?

A Cash Flow Statement shows the inflows and outflows of cash and cash equivalents during an accounting period, classified into three activities.

### The Three Activities

#	Activity	Nature
1	Operating	Day-to-day business revenue/expense
2	Investing	Long-term asset acquisition/disposal
3	Financing	Changes in capital and borrowings

### Structure of the Statement

```

Cash Flow from Operating Activities XXX

Cash Flow from Investing Activities XXX

Cash Flow from Financing Activities XXX

─────────────────────────────────────────────

Net Increase / (Decrease) in Cash XXX

Add: Opening Cash & Cash Equivalents XXX

─────────────────────────────────────────────

Closing Cash & Cash Equivalents XXX

```

### Verification

The Closing Cash & Cash Equivalents must agree with the Cash/Bank balance on the Balance Sheet. If there is a gap, investigate where the extra cash came from — it must be traceable to one of the three activities.

⚠️ Common exam mistakes

Forgetting to add opening cash to net cash — students often report net cash as the closing balance.
Treating net cash as the only check — always verify closing CCE against the Balance Sheet Cash/Bank figure.

Reference:

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Cash Flow Statement – Overview and Structure

Worked example

⚠️ Common exam mistakes