Suman Kumawat (Article) (612 Points)
14 August 2015Is it mandatory for newly incorporated private limited company to prepare cash flow statement eventhough the commercial activity has not been started yet?
Deepak Gupta
(CA Student)
(15922 Points)
Replied 14 August 2015
From FY 2014-15 onwards, cash flow statement is a compulsory part of the financial statement, except in the case of one person co., dormant co. and small co. [sec. 2(40)].
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Since the entity is newly incorporated and there is no commercial activity, it can be classified as a ‘small company’, if the paid-up share capital does not exceed Rs. 50 lakh AND turnover (as per its last P&L A/c) does not exceed Rs. 2 crore [sec. 2(85)].
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Second condition gets fulfilled by itself since it’s the first year. If the company also fulfills the first one, then it’s financial statements may not include cash flow statement.
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