2. The purpose of preparing the statement of cash flows is to provide users of accounting statements with information on the inflows and outflows of cash and cash equivalents of an enterprise during a certain accounting period, so as to facilitate the users of the statements to understand and evaluate the enterprise's ability to obtain cash and cash equivalents, and to predict the enterprise's future cash flows on the basis of such information.
Definitions
3. The following terms, as used in this standard, are defined as:
(1) Cash, cash on hand of an enterprise and deposits that are readily available for payment.
(2) Cash equivalents are investments held by an enterprise that are short-term, highly liquid, readily convertible to known amounts of cash, and subject to an insignificant risk of changes in value. (Hereafter, references to "cash" include both cash and cash equivalents unless they also refer to cash equivalents).
(3) Cash flow refers to the inflow and outflow of cash and cash equivalents of an enterprise.
Classification of cash flow
4. Cash flow should be divided into the following three categories:
(1) cash flow from operating activities;
(2) cash flow from investing activities;
(3) cash flow from financing activities.
Cash flows from operating activities
5. Operating activities are all transactions and events other than investing activities and financing activities of an enterprise.
6. Cash inflows from operating activities mainly include:
(1) cash received from the sale of goods and provision of labor services (excluding VAT sales tax received; net of cash paid on account of sales returns);
(2) rents received;
(3) VAT sales tax received and VAT refunded;
(4 ) Tax refunds received other than VAT.
7. Cash outflows from operating activities mainly include:
(1) cash paid for purchases of goods and services (excluding input tax that can be deducted from VAT output tax; net of cash received for the return of purchases);
(2) cash paid for operating leases;
(3) cash paid to and for employees;<
(4) VAT payments (excluding input tax which cannot be deducted from VAT output tax);
(5) Income tax payments;
(6) Taxes paid other than VAT and income tax.
Cash flows from investing activities
8. Investing activities refer to the construction of long-term assets and investments excluded from cash equivalents of the enterprise and its disposal activities.
9. Cash inflows from investing activities mainly include:
(1) cash received from the recovery of investments;
(2) cash received from the distribution of dividends or profits;
(3) acquisition of bond interest received
(2) cash paid for equity investments;
(3) cash paid for creditor investments.
Cash flows from financing activities
11. Financing activities are activities that result in changes in the size and composition of an enterprise's capital and debt.
12. Cash inflows from financing activities mainly include:
(1) cash received from absorbing equity investments;
(2) cash received from issuing bonds;
(3) cash received from borrowing.
13. Cash outflows from financing activities mainly include:
(1) cash paid for debt repayment;
(2) cash paid for incurring financing expenses;
(3) cash paid for distributing dividends or profits;
(4) cash paid for interest repayment;
(5) cash paid for finance leases;
(6) cash paid for financing activities;
(7) cash paid for financing activities;
(8) cash paid for financing activities;
(9) cash paid for financing activities
(6) Cash paid for reduction of registered capital.
Purchase or Disposal of Subsidiaries and Other Business Units
14. Cash flows arising from the purchase or disposal of subsidiaries and other business units shall be treated as cash flows from investing activities and presented separately.
15. The total cash paid or received for the purchase or disposal of subsidiaries and other business units shall be presented net of cash acquired or paid for the purchase or disposal.
16. The enterprise shall disclose in the notes to the statements the following information about the purchase or disposal of subsidiaries and other business units in the current period in gross terms:
(1) the purchase or disposal price;
(2) the portion of the purchase or disposal price that is settled in cash;
(3) the cash acquired for the purchase or disposal of subsidiaries and other business units;
(4) the cash paid or received for the purchase or disposal of subsidiaries and other business units;
(5) the cash received for the purchase or disposal of subsidiaries and other business units. p>(4) non-cash assets and liabilities by major category of subsidiaries and other business units purchased or disposed of.
Cash flow of financial and insurance enterprises
17. The categorization of cash flow items of financial and insurance enterprises has its own peculiarities. If the categorization of cash flow items mentioned above is not applicable when the enterprise prepares this table, it can be reasonably determined according to its industry characteristics and actual cash flow situation.
18. The following cash receipts and cash disbursements of financial enterprises shall be regarded as cash flows from operating activities:
(1) Loans granted to the outside world and the principal amount of loans recovered;
(2) Deposits taken in and the principal amount of deposits paid out;
(3) Deposits from and deposits with interbanks;
(4) Funds borrowed and lent from other financial enterprises;
(5) Funds borrowed from other financial enterprises;
(6) Funds borrowed from other financial enterprises; and
(7) Cash flows from the outside world and cash flows from the outside world. borrowings from other financial enterprises;
(5) interest income and interest expense;
(6) recoveries of loans written off in prior periods;
(7) cash received or expended for the purchase and sale of securities by enterprises engaged in the securities business;
(8) cash received from finance leases.
19.Items of cash receipts and cash disbursements of an insurance business relating to insurance premiums, insurance claims, annuity refunds, and other terms of insurance benefits shall be treated as cash flows from operating activities.
Preparation of a cash flow statement
20.A cash flow statement should report the cash flows of an enterprise separately for operating activities, investing activities and financing activities.
21. Cash flow should generally be reflected as total cash inflows and outflows respectively. However, cash received or paid on behalf of customers, as well as cash receipts and cash disbursements for projects with fast turnover, large amounts and short maturities should be presented on a net basis.
The following items of a financial enterprise shall be presented on a net basis:
(1) loan principal for short-term loan disbursements and recoveries;
(2) demand deposits absorbed and disbursed;
(3) interbank deposits and deposits placed with interbank monies;
(4) borrowings from other financial enterprises;
(5) for enterprises operating securities business, the purchase and sale of securities;
(6) entrusted deposits and entrusted loans.
22. Cash flows in foreign currencies and those of foreign subsidiaries shall be translated at the exchange rate or average exchange rate at the date of the cash flows, and the effect of exchange rate changes on cash shall be shown as a reconciling item in a separate cash flow statement.
23. Some special items, such as natural disaster losses, insurance claims, etc., should, according to their nature, be grouped into the aforementioned categories of cash flows and presented separately.
24. An enterprise should adopt the direct method of reporting cash flows from operating activities, i.e., cash flows from operating activities should be reflected by the major categories of cash receipts and disbursements.
When the direct method is used, information on cash flows from operating activities can be obtained through one of the following means:
(1) the accounting records of the enterprise;
(2) adjustments to operating income, operating costs and other items in the income statement based on the following items:
①changes in deposits and loans and operating receivables and payables during the period;
(2) changes in fixed assets and operating receivables and payables; and
(3) changes in operating expenses. >
② Other non-cash items such as depreciation of fixed assets and amortization of intangible assets;
③ Other items whose cash impacts are part of cash flows from investing or financing activities.
25.An enterprise should also disclose in the notes to the statements the reconciliation of net profit to cash flows from operating activities.
The items that reconcile net profit mainly include:
(1) provision for bad debts or write-off of bad debts;
(2) depreciation of fixed assets;
(3) amortization of intangible assets;
(4) gain or loss on disposal of fixed assets, intangible assets and other long-lived assets;
(5) fixed assets scrapping Losses;
(6) Finance costs;
(7) Gains and losses on investments;
(8) Deferred tax;
(9) Inventories;
(10) Operating receivables;
(11) Operating payables;
(12) Net value-added tax.
Investing and financing activities not involving cash receipts and payments
26. Significant investing and financing activities that do not involve cash receipts and payments in the current period but affect the financial position of the enterprise or are likely to affect the enterprise's cash flows in the future should also be described in the notes to the statements. Such as the enterprise to assume the form of debt acquisition of assets, long-term investment in debt repayment and so on.
Attachments
27. The Ministry of Finance is responsible for the interpretation of these guidelines.
28. This guideline shall come into force on January 1, 1998.
Ministry of Finance of the People's Republic of China
March 20, 1998
Attachment: Basic Format of Statement of Cash Flows
Statement of Cash Flows
Conciliation of Statement of Cash Flows
Prepared by: Year Unit: Yuan
Item Line Amount
I. Cash Flows from Operating Activities< /p>
Cash received from sales of goods and rendering of services 1
Rent received 2
VAT sales tax received and VAT refunded 3
Tax refunds received other than VAT 4
Other cash received related to operating activities 7
Subtotal of cash inflow 8
Purchases Cash paid for goods and services 9
Cash paid for operating leases 10
Cash paid to and for employees 11
VAT paid 12
Income tax paid 13
Taxes paid other than VAT and income tax 14
Other cash paid related to operating activities 17
Other cash received related to operating activities 17
Other cash received related to operating activities Cash related to operating activities 17
Subtotal of cash outflows 18
Net cash flows from operating activities 19
II. Cash flows from investing activities
Cash received from recovery of investments 20
Cash received from dividend or profit distribution 21
Cash received from interest income on bonds 22
Net cash received from disposal of fixed assets, intangible assets and other long-term assets 23
Receipt of other cash related to investing activities 26
Subtotal of cash inflows 27
Cash paid for acquisition and construction of fixed assets, intangible assets and other long-term assets 28
Cash paid for equity investments 29
Cash paid for debt investments 30
Other cash paid related to investing activities 33
Subtotal of cash outflows 34
Net cash flows from investing activities 35
III. Cash flows from financing activities
Cash received from absorption of equity investments 36
Bond issuance Cash Received 37
Cash Received from Borrowing 38
Other Cash Received in Connection with Financing Activities 41
Subtotal of Cash Inflows 42
Cash Paid for Debt Repayment 43
Cash Paid for Incurring Financing Costs 44
Cash Paid for Distributing Dividends or Profits 45
< p>Cash paid for interest repayment 46Cash paid for finance leases 47
Cash paid for reduction of registered capital 48
Other cash paid in connection with financing activities 51
Subtotal of cash outflows 52
Net cash flows from financing activities 53
Four, the effect of exchange rate changes on the Effect of Exchange Rate Changes on Cash 54
V. Net Increase in Cash and Cash Equivalents 55
Subtotal of Supplementary Information Line Item Amounts
1. Investing and Financing Activities Not Involving Cash Receipts and Disbursements:
Repayment of Debt with Fixed Assets 56
Repayment of Debt with Investments 57
Investment with Fixed Assets 58
Repayment of debt with inventories 59
2. Reconciliation of net profit to cash flows from operating activities:
Net profit 62
Plus: provision for or write-off of bad debts 63
Depreciation of fixed assets 64
Amortization of intangibles 65
Losses on disposals of fixed assets, intangibles, and other long-lived assets ( Less: gain) 66
Loss on retirement of fixed assets 67
Financial expenses 68
Loss on investments (Less: gain) 69
Deferred tax credits (Less: debits) 70
Decrease in inventories (Less: increase) 71
Decrease in operating items receivable (Less: increase) 72
Increase (minus: decrease) in operating payables 73
Net increase in value-added tax (minus: decrease) 74
Net cash flows from operating activities 75
3. Net increase in cash and cash equivalents:
Closing balance of cash 76
Minus: opening balance of cash 77
Add: cash equivalents closing balance 78
Minus: cash equivalents opening balance 79
Net increase in cash and cash equivalents 80