In November 1996 the Accounting Standards Board issued FRS 1 (Revised) – Cash Flow Statements. The appendix to FRS 1 contains a number of examples of cash flow statements drawn up in accordance with the new Standard. The examples given present the cash flows under a number of standard headings, as shown below.

Requirements

(a) Describe the cash flows which are reported under each of the headings (i) to (viii), given above. (10 marks)

(b) Summarise the changes which FRS 1 (Revised) made to the old FRS 1, and explain why each change was considered necessary by the Accounting Standards Board.

Transcribed Image Text:

000 **********|*|| (i) Cash flow from operating activities (ii) Returns on investments and servicing of finance (iii) Taxation (iv) Capital expenditure and financial investment (v) Acquisitions and disposals (vi) Equity dividends paid (vii) Management of liquid resources (viii) Financing Decrease in cash in the period