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In your own words, articulate the differences in cash flow statements required under GASB standards when compared with...

  1. In your own words, articulate the differences in cash flow statements required under GASB standards when compared with cash flow statements required by FASB standards. Provide specific examples of the differences.
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Answer #1

In case of GASB standards the cash flow statement has four segments - operating, investing, cash flows from noncapital financing activities and cash flows from capital and related financing activities. In case of FASB standards the cash flow statement has three segments - operating, investing and financing.

Secondly GASB requires that the concerned organization uses only the direct method of determining cash flows from operating activities while in case of FASB cash flow from operations can be computed using either the direct method or the indirect method.

For example consider the example of cash flow related to payments in debt. In case of GASB both the principal as well as the interest payments will be included in the cash flows from capital and related financing activities section of the cash flow statement. However in case of FASB the cash flow statement’s financing section will show only the principal payments on debt.

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