Accounts and Finance
Step 6 Fund Flow and Cash Flow

It means Cash Flow prepared as per Accounting Standard -3 as notified by Government

It is compulsory for every Company to Make Cash Flow as per this format

  What is Cash Flow as per AS-3 - Cash Flow  Statement as Per AS-3

In normal Cash Flow, there are 3 heads

  1. Sources of Cash
  2. Uses of Cash


As per AS-3 Cash flow,

These heads are divided into 3 types of Activities

  • Operating Activities
  • Investing Activities
  • Financing Activities

Name of Activity

What Does it Contain?

Operating Activities


All items related to Profit & Loss like Operating Profit, Tax as well as Current Assets Current Liabilities

Investing Activities


All items related to Fixed Assets and Non Current Assets, Indirect Incomes related to Investment like Interest Income

Financing Activities


All items related to Capital, Loan and Interest on Loan

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How to Make Cash Flow As per AS-3

1.Take normal Cash Flow Statement and categorize them into 3 types of Activities (OA/IA or FA)


  1. Put in 3 heads
    • Cash From Operating Activities
    • Cash From Investing Activities
    • Cash From Financing Activities


        If it is a Source, Amount will come in positive

        If it is a Use, Amount will be negative


  1. Calculate Cash From All Activities

It means total of Operating, Investing and Financing Activities

Check:- If we have prepared correctly, It Should be equal to Surplus of Cash of Normal Cash Flow


  1. Add Opening Balance of Cash and Cash Equivalents to Cash From All Activities to arrive at Closing Balance of Cash and Cash Equivalents

This should match with Balance of Cash,Bank and FD as per Balance Sheet


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CA Maninder Singh

CA Maninder Singh is a Chartered Accountant for the past 13 years. He also provides Accounts Tax GST Training in Delhi, Kerala and online.