Cash flows of a business are the most fundamental events upon which accounting measurements are based and upon which investors and creditors are assumed to base their decisions. Then why did the FASB wait until November 1987 to issue a standard "requiring" businesses to provide a Statement of Cash Flows, and what subsequent changes have been made to the standard? Possibilities of the delay include: (1) fear of regressing from accrual accounting emphasis to a cash emphasis: (2) the area of cash flows was not perceived to be "urgent " enough to warrant the attention of the standard-setting bodies forced the delay; and (3) pressure from practitioners and political group on standard-setting bodies forced the delay. Once passed, SFAS No. 95, "Statement of Cash Flows" has been amended by two additional standards, SFAS 102 and 104 in February and December 1989, respectively. SFAS 102 deals primarily with Cash Flows from Hedging Transactions, while SFAS 104 pertains to Cash Flows from Certain Securities Acquired for Resale.
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Jones, Rita and Atkinson, Keith
"Evolution of The Cash Flow Statement Through 2003,"
Journal of Business & Leadership: Research, Practice, and Teaching (2005-2012): Vol. 1:
1, Article 26.
Available at: https://scholars.fhsu.edu/jbl/vol1/iss1/26