A cash flow statement is required as part of a complete set of financial statements prepared in conformity with Indian Accounting Standards. AS- lays down a formal structure for the cash flow statement. Cash flows should be classified under the following three standard headings: “Operating activities”, “Investing activities”, “Financing activities”. The classification of cash flow among operating, investing, and financing activities is essentials to the analysis of cash flow data. Net cash flow (the change in cash and equivalents during the period) has little information content by itself; it is the classification and individual components that are informative. Although the classification of cash flows into the three main categories is important, it should be mentioned that classification guidelines are arbitrary.