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Are Cash Flow Statements mandatory?
We did not have a definition of financial statement until the coming of Companies Act 2013 which gave the definition of financial statement under sec 2 (40). It says Financial Statement in relation to a company includes: Financial Statement w.r.t. One Person Company, Dormant Company and Small Company may not include Cash Flow Statement.
One Person Company
A company which has only one person as member.
Dormant Company
A company that is formed to hold an asset or intellectual property (patent, copyright e.tc.)or a company which is formed for a future project and has no significant accounting transaction such a company is called Dormant Company or Inactive Company. A company which has not carried out any business operation or has not made any significant transaction during last two financial years or has not filled Financial Statements during last two financial years , such company is also included in the definition of inactive company.
Accounting transaction shall not include:
Fees to the registrarPayment made to fulfill the requirement of any Act or any other lawAllotment of sharesOffice maintenance expenses
The reason for not including these is that they don’t constitute significant transaction. Mere paying the fees of the registrar or issuing shares or incurring office maintenance expenses, one company cannot be said to active.
Small Company
Not a public CompanyPaid up capital does not exceed 50 lac or any such amount as may be prescribed but such shall not exceed 5 croreTurnover does not exceed 2 crore or any such amount as may be prescribed but such shall not exceed 20 crore
Thanks Recommended
Ind AS 7 – Statement of Cash FlowsCash Flow StatementAccounting Standard 3 Cash Flow Statement
