Are Cash Flow Statements mandatory? – a detailed analysis

Are Cash Flow Declarations compulsory?. We did not have a meaning of monetary statement till the coming of Business Act 2013 which gave the definition of monetary declaration under sec 2 (40) There are numerous questions related to Money Circulation Declaration like– cash flow statement obligatory for which companies in India, can cash flow declaration obligatory etc.

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Are Capital Declarations mandatory?

We did not have a definition of financial declaration up until the coming of Companies Act 2013 which offered the definition of financial declaration under sec 2 (40) It states Financial Statement in relation to a business includes:

  1. Balance Sheet
  2. Earnings and loss A/c/ Earnings and Expense a/c for non-profit organization
  3. Capital declaration
  4. Declaration of modifications in equity (if applicable )
  5. Explanatory Notes forming a part of any document referred above.

Financial Statement w.r.t. A Single Person Company, Dormant Company and Little Company may not include Cash Flow Statement.

Preparation of Money Flows declarations for all companies (except someone Company, Small Co and Dormant Co.) are compulsory as per Companies Act2013 Earlier just noted business covered under noting arrangement of clause no 32 we required to prepare Capital Statements.

One Person Company

A company which has just one person as member.

Dormant Business

A business that is formed to hold a property or copyright (patent, copyright e.tc.) or a business which is formed for a future project and has no considerable accounting transaction such a business is called Dormant Business or Inactive Business.

A company which has not performed any business operation or has actually not made any considerable transaction during last 2 financial years or has not filled Financial Statements throughout last two fiscal years, such company is also consisted of in the definition of non-active business.

Accounting deal will not include:

  • Charges to the registrar
  • Payment made to satisfy the requirement of any Act or any other law
  • Allotment of shares
  • Workplace maintenance expenditures

The factor for not consisting of these is that they don’t constitute significant transaction Simple paying the costs of the registrar or issuing shares or incurring workplace upkeep expenditures, one business can not be stated to active.

Small Company

  • Not a public Company
  • Paid up capital does not surpass 50 lac or any such amount as may be recommended however such shall not exceed 5 crore
  • Turnover does not go beyond 2 crore or any such amount as might be prescribed but such shall not surpass 20 crore

Therefore all business, whether Public or Personal are mandatorily required to prepare Capital declarations other than One person business, Inactive Company and Little Business.

Thanks

Suggested

  • Ind AS 7– Statement of Cash Flows
  • Cash Flow Statement
  • Accounting Requirement 3 Capital Statement

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