Background Information on the Cash Flow Statement

In 1987, the Financial Accounting Standards Board (FASB) issued Statement No. 95, Statement of Cash Flows. This statement establishes standards for cash flow reporting for all business enterprises. It requires that a statement of cash flows classify cash receipts and payments according to whether they originate from operating, investing, or financing activities and provides definitions of each category. It supersedes Accounting Principles Board (APB) Opinion No. 19, Reporting Changes in Financial Position.

The Governmental Accounting Standards Board (GASB) began its study of cash flow reporting by evaluating the provisions of FASB 95 within the context of the governmental environment. In 1989, GASB Statement No. 9, Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and Governmental Entities That Use Proprietary Fund Accounting, was issued. GASB 9 established new guidelines for governments in preparing cash flow statements.

This section of the course includes the following:

• GASB 9, 34 and 35
• The Purpose of the Statement of Cash Flows
• Fund types affected
• Cash and Cash Equivalents
• Direct Method
• What is a cash flow?

Next: GASB 9, 34 and 35