Question

Cash flow statement is made on Cash Basis or Accrual Basis

Answer 1

Dear Student,

Cash Flow Statement is made on Cash basis i.e what cash actually flows in and out but is basically prepared to show the Accrual accounting entities that how they are actually performing in terms of their liquidity;

This statement is similar to Profit & loss statement excluding the non-cash expenses part like depreciation and amortisation;

Regards,