# Cash Flow Statement Notes, Class 12 Accountancy | SwaVid Cash Flow Statement, NCERT Class 12 Accountancy: notes with key ideas, formats, common mistakes and 3 quick checks with worked answers. Canonical: https://www.swavid.com/cbse/class-12/accountancy/chapter/cash-flow-statement Source: https://www.swavid.com/cbse/class-12/accountancy/chapter/cash-flow-statement # Cash Flow Statement ## Definitions, formats and formulas ## Key ideas ## Common mistakes ## Quick checks ## Keep going ## Questions parents ask ## Class 12 Accountancy on SwaVid ### Meaning of cash flow statement ### Cash and cash equivalents ### Operating activities ### Investing activities ### Financing activities ### Non-cash transactions ### Related chapter ### Related chapter ### Related chapter ### All chapters SwaVid › CBSE › Class 12 › Accountancy › Cash Flow Statement Notes written by SwaVid from the NCERT textbook. Class 12 Accountancy, NCERT Accountancy Part II: companies, analysis and cash flow. Key ideas, definitions and common mistakes. CBSE does not print marks for a single chapter. Short answer. This chapter explains the preparation and presentation of a cash flow statement as per Accounting Standard 3 (Revised). It enables students to classify and report cash flows from operating, investing, and financing activities. Source: NCERT Accountancy Part II: companies, analysis and cash flow (Reprint 2026-27) , Cash Flow Statement A cash flow statement shows the historical inflows and outflows of cash and cash equivalents during a specific accounting period. It classifies cash movements into operating, investing, and financing activities. Cash comprises cash in hand and demand deposits with banks. Cash equivalents are short-term, highly liquid investments that are readily convertible into known amounts of cash with insignificant risk of changes in value, typically having a maturity of three months or less. Operating activities are the principal revenue-generating activities of an enterprise and other activities that are not investing or financing activities. They are derived from the primary business operations, such as cash receipts from the sale of goods and cash payments to suppliers. Investing activities involve the acquisition and disposal of long-term assets and other investments not included in cash equivalents. Examples include the purchase and sale of fixed assets and receipts of interest or dividends on outside investments. Financing activities are activities that result in changes in the size and composition of the owner's capital and borrowings of the enterprise. These include proceeds from issuing shares or debentures, repayment of loans, and payment of dividends. Investing and financing transactions that do not require the use of cash or cash equivalents are excluded from the cash flow statement. Examples include the issue of shares to vendors for acquiring fixed assets or the conversion of debentures into shares. Try each question first. Then tap it to see the answer. Operating profit before working capital changes = ₹2,50,000 + ₹40,000 - ₹10,000 = ₹2,80,000 Cash generated from operations = ₹2,80,000 - ₹20,000 (increase in trade receivables) = ₹2,60,000 ₹2,60,000 Cost of machinery sold = ₹60,000 Machinery purchase = Closing balance + Cost of sold machinery - Opening balance = ₹6,80,000 + ₹60,000 - ₹5,00,000 = ₹2,40,000 Cash inflow from sale of machinery = ₹35,000 Cash outflow for purchase of machinery = ₹2,40,000 Net cash used in investing activities = ₹35,000 - ₹2,40,000 = -₹2,05,000 -₹2,05,000 Proceeds from issue of equity shares = ₹12,00,000 - ₹10,00,000 = ₹2,00,000 Proceeds from issue of debentures = ₹1,00,000 Interim dividend paid = -₹50,000 Net cash from financing activities = ₹2,00,000 + ₹1,00,000 - ₹50,000 = ₹2,50,000 ₹2,50,000 Financial Statements of a Company . Analysis of Financial Statements . Accounting Ratios . The 10 chapters of Class 12 Accountancy . CBSE does not give marks to one chapter. It prints marks for units or parts, and the chapter list page shows them all. No. They are written by SwaVid from the NCERT textbook. The CBSE curriculum is the reference for what is assessed. This is the last chapter in the NCERT books for Class 12 Accountancy. SwaVid is an AI tutor for Indian students in Classes 6 to 12. It finds the earlier ideas a child missed, then teaches today’s chapter. Start free to see how it works. - NCERT NCERT book, Class 12 - 80 marks, theory paper - 3 quick checks - Treating bank overdraft or cash credit as part of cash equivalents . Treat bank overdraft and cash credit as short-term borrowings, which are classified under financing activities, not under cash and cash equivalents. - Treating proposed dividend of the current period as a cash outflow . Ignore proposed dividend of the current period as it is a contingent liability; only consider dividend proposed in the earlier period that is approved and paid during the current period. - Classifying interest paid as an operating activity for a non-financing enterprise . Show interest paid on loans or debentures as a financing activity for a commercial enterprise, and add it back to net profit when calculating operating cash flow. - Including non-cash transactions in the cash flow statement . Exclude transactions that do not involve cash, such as issuing bonus shares or purchasing machinery by issuing shares, from all three sections of the statement. ## Key Links - [CBSE](https://www.swavid.com/cbse) - [Class 12](https://www.swavid.com/cbse/class-12) - [Accountancy](https://www.swavid.com/cbse/class-12/accountancy/chapters) - [Start free →](https://www.swavid.com/signup) - [All 10 chapters](https://www.swavid.com/cbse/class-12/accountancy/chapters) - [NCERT Accountancy Part II: companies, analysis and cash flow (Reprint 2026-27)](https://ncert.nic.in/textbook.php?leac2=0-6) - [Open notes](https://www.swavid.com/cbse/class-12/accountancy/chapter/financial-statements-of-a-company) - [Open notes](https://www.swavid.com/cbse/class-12/accountancy/chapter/analysis-of-financial-statements) - [Open notes](https://www.swavid.com/cbse/class-12/accountancy/chapter/accounting-ratios) - [Class 12 Accountancy](https://www.swavid.com/cbse/class-12/accountancy/chapters) - [Start free →](https://www.swavid.com/signup)