Nature of Cash Flow Statement Video Lecture | Accountancy Class 12 - Commerce

here I would like to tell you one more
thing you already know in cash flow
statement whenever we use the word cash
it includes cash as well as cash
equivalent you know cash equivalent
means marketable securities and one
thing more we have to prepare cash flow
statement as per the requirement of
accounting standards when were we make
the financial statements
it must be supported by cash flow
statement in every company here I would
like to explain you one more term maybe
you are aware you will find it be
oblique o or C oblique C it means bank
overdraft or cash credit these are just
like negative cash balances I mean to
say suppose your company has fifty
thousand rupees in your current account
and in another account there is bank
overdraft of piston thousand so your
bank balance will be taken as forty
thousand rupees because on one side you
are keeping fifty thousand rupees and
another side you owe 10 percent to the
bank it's just like temporary loan I try
to explain this bank over dot with the
help of one example suppose you have got
ten thousand rupees in your account and
today you want to issue a check of
rupees 15 thumb to someone you know that
if you give the check of rupees fifteen
thousand to the party this check cannot
be clear because you don't have
sufficient balance in your account if
you have got some understanding with the
bank you can issue the checks and the
bank will clear the check what it means
you had only ten thousand rupees but the
bank has paid fifteen thousand rupees
to your party it means there is
overdraft or peace 5,000 so this is the
Understanding between bank and your
company that whenever you get new cash
whether in the form of sales or
something you will deposit it in the
bank and you're over dot will be clear
so bank overdraft is just like a
temporary loan for a few days and at
this stage I can say that CC I mean to
say cash credit is almost the same thing
one example suppose on 1st January 2010
you have got hard cash
in your box that is ten thousand rupees
and you have got bank balance of rupees
20,000 in a bank in your current account
you know if you are running some
business you have to open the current
account you cannot operate your
transactions through any savings account
and in another account in the same Bank
or another Bank you have got bank
overdraft of rupees 5000 so what is the
exactly cash balance with you at this
moment that is ten thousand plus 20 is
equal to 30 minus five twenty five
thousand rupees so you can say that at
present my cash and bank balances twenty
five thousand rupees
not thirty thousand rupees now let's
prepare a cash book
you know Cashbook is prepared you have
already learned in P shape on left side
it is called debit and right hand side
is called credit side in other words I
can say all plus items are put on debit
side and all - items are placed on
credit side or in other words to
simplify this thing I can say that on
debit side you write down receipts and
on credit side you write down payments
so let's prepare one cash book to
balance bading 5,000 to sales 6,000 to
furniture 1,000 to Commission 2000 and
the total is 14,000 rupees and on credit
side by purchases 5000 rupees expenses
2000 computer 4000 by balance ad 3,000
total 14000 so this is the cash book you
have made so many times in your
classroom this type of cash book it is a
very simple cash book what I am trying
to tell you that cash book records all
the transactions they advise but when
you prepare the cash flow statement all
these receipts and all these payments
will be grouped in three activity and
those three activities or those three
categories are operating activities
financial activities and investing
activities so this is the only thing you
have to do to prepare the cash flow
statement and one thing more I would
like to tell you that all transactions
fall in these categories there is no any
other activity that you will find it or
you find any transactions cash
transaction that you are not able to
find that in which categories it will
fall so very soon I am going to explain
you what are these activities and what
are the transactions fall in the
category of different activities or
groups
you