How is IAS 7 Applied in Argentina?

How is IAS 7 Applied in Argentina?

Comparte esta noticia

Share on linkedin
Share on facebook
Share on whatsapp
Share on twitter
Share on email

The objective of International Accounting Standard No. 7 (IAS 7), is to require the provision of information about historical changes in an entity’s cash and cash equivalents through a cash flow statement in which the cash flows for the period are classified as coming from operating, investing and financing activities.

In Argentina there are no substantial differences between the criteria set out in the body of the full IFRS, the IFRS for SMEs and the local standards in relation to the presentation of the cash flow statement.

The only relevant thing we can highlight is that according to the full IFRS and the IFRS for SMEs, bank overdrafts or overdrafts are usually considered within financing activities. However, the regulations make it clear that in some countries overdrafts required at any time by the bank are an integral part of the entity’s cash management. In such circumstances, such overdrafts are included as components of cash and cash equivalents. This provision is not covered by local regulations.

For the application of IAS 7 in Argentina, the following points must be known:

What are cash flows?

Cash flows are the inflows and outflows of cash, which are produced in an entity mainly from the production and sale of goods and/or services with the intention of generating profits.

IAS 7 establishes the following definitions:

  1. Cash flows are the inflows and outflows of cash and cash equivalents.
  2. Cash comprises both cash and bank deposits on demand.
  3. Cash equivalents are short-term, highly liquid investments that are readily convertible to specified amounts of cash and are subject to an insignificant risk of changes in value.

The various cash flows

In economic entities, the generation of cash is given by actions that represent positive flows, while the use of cash can be given by actions that represent negative flows. In this way, in a general way they can be listed as:

Positive flows

  • Customer collections.
  • Shareholder capital contributions.
  • Bank loans.
  • Sales of assets.

Negative flows

  • Payments to suppliers.
  • Payments of bank loans.
  • Operating, administrative and other expenses.
  • Payment of social benefits, wages and salaries.
  • Payment of dividends.
  • New investments.

Classification of cash flows in accordance with IAS 7

The cash flow statement will report cash flows during the period, classifying them by activity:

  1. Operating activities are those activities that constitute the principal source of income of the entity, as well as other activities that cannot be classified as investing or financing activities.
  2. Investing activities are those of acquisition and disposal of long-term assets, as well as other investments not included in cash equivalents.
  3. Financing activities are those activities that produce changes in the size and composition of the equity and loans taken by the entity.

Noticias Relacionadas

Market Price Study
Blog English

Market Price Study

Market price research involves the systematic and objective collection, analysis, and information assessment on specific aspects of marketing issues to assist management in making important


How can we help you?

    To communicate with us you need to fill out the following form

    I have read and agree the privacy policy