Global Journal of Management and Business Research, C: Finance, Volume 22 Issue 5

20 Global Journal of Management and Business Research Volume XXII Issue V Version I Year 2022 ( ) C © 2022 Global Journals Does the Formal Structure of the Cash Flow Statement have an Impact on the Understanding of the Data Contained in the Report Explaining the Company's Financial Dynamics? Interest and dividend cash flows are presented separately in the cash flow statement; therefore, no single amount of dividends and interest is reported in the cash flow statement. The classification of interest and dividend cash flows is kept constant over time. 9 Income Taxes Cash flows related to income taxes are separately disclosed and classified in operating activities. Examples of cash outflows are: the payment of taxes to tax authorities, including charges on account of taxes. Examples of cash inflows are: payments received from tax authorities, including surpluses and refunds. Foreign currency cash flows Cash flows arising from transactions in foreign currencies are recorded in the company's financial reporting in euros by applying to the foreign currency amount the exchange rate between the euro and the foreign currency at the time the cash flow occurs. Gains or losses arising from unrealised exchange rate fluctuations in foreign currencies do not represent cash flows; the profit (or loss) for the year is, therefore, adjusted to account for these transactions, which are not monetary. The effect of exchange rate changes on cash held in foreign currencies is presented separately from cash flows from operating, investing and financing activities. Derivative Financial Instruments Cash flows arising from derivative financial instruments are presented in the cash flow statement in investing activities. Suppose a derivative financial instrument (e.g. a futures, forward contract, option, swap) is designated as a hedging instrument. In that case, the related cash flows are presented in the same category as the cash flows of the hedged item (e.g. a medium- to long-term loan). The cash inflows and outflows of the hedging derivative are reported separately from the cash flows of the hedged item. Purchase or sale of business units The cash flow arising from the consideration paid/collected for the acquisition and disposal of a business unit is presented separately in investing activities, net of cash acquired or disposed of as part of the transaction. The company also discloses the following information at the bottom of the cash flow statement: a) the total consideration paid or received; b) the portion of the consideration consisting of cash; and c) the amount of cash acquired or disposed of as part of the business acquisition/disposal transaction and d) the carrying amount of the assets/liabilities acquired or disposed of. It may not offset the cash flow relating to the acquisition of one line of business against the cash flow relating to the disposal of another line of business. " The Italian national accounting standard IAO (Italian Accounting Organismo) number 10 cash flow statement, unlike the international standard IAS 7, provides for schemes that companies must apply. even if they are defined as reference schemes for the preparation of the cash flow statement, in essence, they are compulsory schemes that the company must use. As can be seen from the schedules on the following pages, and provides for the possibility of determining the flow of operating activities with the indirect and direct method precisely as is the case with international standard IAS 7. Principle iao (italian accounting organism (henceforth iao, in italian language oic)) n. 10 the cash flow statement Appendix A - Reference Schedules for the Preparation of the Cash Flow Statement This appendix is an integral part of the standard. Schedule 1: Cash flow from operating activities determined by the indirect method 200X 200X-1 A. Cash flows from operating activities (indirectmethod) Profit (loss) for the year Income taxes Interestexpense/(interestincome) (Dividends) (Gains)/losses on disposal of assets 1. Profit (loss) for the yearbeforeincome taxes, interest, dividends and capital gains/losses on disposal Adjustments for non-cash items thatdidnothave a balancing entry in net working capital Allocations to provisions Depreciation of fixed assets Write-downs for impairment losses Value adjustments of financial assets and liaoilities of derivative financialinstrumentsnotinvolving a monetarymovement Otheradjustments for non-monetary items 2. Cash flow beforechanges in net working capital