Separate disclosure of cash flows arising from Financing Activities is important because:
- AIt helps in identifying the investment activities.
- BIt helps in gaining in investing activities.
- CIt helps in making investing decision.
- DIt is useful in predicting claims on future cash flows by providers of funds to the enterprise.
Solution & Step-by-step Explanation
As per Accounting Standard-3 (AS-3), reporting cash flows from financing activities separately is crucial because it provides the users of financial statements a direct basis for predicting the structural claims on future cash flows that will be demanded by the providers of capital (such as equity shareholders, preference shareholders, and debenture holders) in the form of future dividends or interest payments.