- Operating activities
Cash flows from operating activities are in general the cash effects of transactions and other events relating to operating or trading activities, normally shown in the profit and loss account in arriving at operating profit. They include cash flows in respect of operating items relating to provisions, whether or not the provision was included in operating profit.
A reconciliation between the operating profit reported in the profit and loss account and the net cash flow from operating activities should be given either adjoining the cash flow statements or as a note. The reconciliation is not part of the cash flow statement: if adjoining the cash flow statement, it should be clearly labeled and kept separate. The reconciliation should disclose separate the movement in stocks, debtors and creditors related to operating activities and other differences between cash flows and profits.