The statement of cash flows (ODDS) is a tabular form that contains the relevant data about them in the section of articles, as well as information about their income in the organization and about the payments. This document is one of the four core materials. Under the other three are meant: the balance sheet; reports of loss-profits and changes in equity.
Here we consider all the nuances. ODDS must disclose all necessary information about the cash flow of the organization, which can characterize the sources of income of funds, their direction and expenditure. These data are necessary for both owners and lenders. This is an important document. For example, if owners have the necessary information about the flows of these funds, then they can more efficiently approach the development of a policy for the use and distribution of profits. And to the lenders, such data will help to accurately draw a conclusion about certain possibilities of a potential borrower and his ability to generate these funds, which are necessary for repayment of obligations. This once again confirms the importance of this document. Data on the direction of funds flow of an enterprise determine the corresponding accounts - those on hand, special currency and settlement accounts - which reflect in increasing order from the beginning of the year and represent in the currency of the Russian Federation.
Ways to compile
At this time, a statement of cash flows can be made by indirect and direct method. It all depends on the individual approach.
- In the direct method, the directions in which the flows of these funds flow are clearly indicated. It is the most used method.
- By indirect method refers to the indirect receipt of the data. Namely, this is done by making adjustments to the profits relative to the amount of changes in non-cash items.
Structural features of the cash flow statement
This document consists of three sections:
- Cash flows from current operations. They should be within the framework of the organization’s activities.
- Availability of cash flows from investment operations. In this case, implying the carrying out of intangible assets, the issuance of loans, etc.
- Cash flows from financial actions. Here are taken into account as borrowed investments, and received from the owners.
Currently, documentation of the movement of fixed assets is carried out according to certain criteria. This is important to know. This action is carried out in accordance with the order of the Ministry of Finance of the Russian Federation of 02.07.2010, No. 66n “On the forms of accounting reporting of organizations”.
This document is financially significant. The cash flow statement is a valuable source of information for analyzing actual cash flows. This is unimportant material. Unlike indicators such as revenue or profit, which are heavily dependent on accounting rules, ODS allows investors to more accurately determine where the enterprise is spending money and what returns can be expected from investing in it. This is a significant factor.
In contrast to such documents as “Balance Sheet” and “Profit and Loss Report”, the preparation of DDS is not carried out in all organizations that maintain accounting records. For example, for subjects of various small businesses, you can skip the specified document, if they consider that it does not contain important data for evaluating their activities. In addition, the odds are related to the annual materials of the accounting report, which, according to the legislation, are prepared only for the annual results. However, some organizations, at their own discretion, may draw up this document monthly or quarterly.
Cash Flow Statement - Form 4
Consider a detailed description of this document. In the ODDS form № 4 carry out the formation of information about the movement of funds of the enterprise in the currency of the Russian Federation and in foreign. These data are for the previous and reporting year. This is an important condition. For drawing up the report apply the official currency of the Russian Federation - rubles. However, their unit of measurement is the same as in the balance sheet (thousands or millions). The code of this form according to OKUD is 0710004. The construction of this document is based on the balance principle: in this plan, income is added to the balance that exists at the beginning of the reporting period. Then, the expense is subtracted from the calculated value, resulting in a balance at the end of the reporting period.
Where is it needed?
Determination of income and directions of these funds is carried out in such activities as investment, current and financial. This fact is set out in paragraph 15 of the Guidelines on the procedure for preparation and submission of financial statements, which are regulated by the order of the Ministry of Finance of the Russian Federation No. 67n dated July 22, 2003. In the DDS, data are indicated that directly follow from the accounting records of funds. The source is information indicated in the following accounts:
- Special nature. These are accounts that are in banks, with the exception of deposit.
As mentioned above, the data in the ODDS should describe changes in the financial, current and investment activities of the organization. This is an important factor. Data on the movement of the company's financial resources in form N 4 are in the currency of the Russian Federation. It is important to know. If there are funds in a foreign currency, form information about its movement in each of its varieties in relation to odds. This is a prerequisite in the preparation of this document. After that, the data of all calculations made in foreign currency are recalculated in accordance with the exchange rate, which was indicated in the Central Bank of the Russian Federation at the time of drawing up the accounting report. This action is carried out without fail. Then, the obtained data is summed by separate calculations when filling in certain indicators, which are indicated in the ODDS.
After reviewing the above, you can say exactly what the specified document is. Namely: the cash flow statement has information about where the money was received from within the organization for a certain period, and what exactly they were spent on. This document, together with other financial statements, allows for the submission of information by which indicators of monetary turnovers are evaluated. The data in the odds also helps to determine the changes in the organization’s assets, financial structure (solvency and liquidity), ability to regulate time and the density of funds in the existing conditions of internal and external factors that can constantly change. The presence of this document in the financial statements allows you to fully design the present value of the planned cash flows for comparative evaluation of organizations. This is an important argument. At the same time, there are no restrictions for the corresponding analysis of the indicated flows, which are connected with the dependence on the parameters of any other reporting and on the chosen accounting policy of the company.