Cash Flow Statement is prepared as per AS-3 (Cash Flow Statements).
AS-3 specifically deals with the preparation and presentation of Cash Flow Statement, which is a mandatory part of financial statements under The Companies Act 2013 for prescribed class of companies.
The other Accounting Standards mentioned serve different purposes:
- AS-1 deals with Disclosure of Accounting Policies
- AS-5 covers Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies
- AS-7 relates to Construction Contracts
AS-3 requires classification of cash flows into three activities: Operating Activities, Investing Activities, and Financing Activities, helping users understand the cash generation and utilization pattern of the enterprise.