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2.2 Statement of Cash Flow Overview
2.2.1 Revolution of Statement of Cash Flow.
According to the article written by Kinzele (1990), the statement of cash
flow
was initially developed decades ago by companies using the method of
classifying
the
diverse
increases
and
decreases
of
the
entity’s
balance
sheet
item.
Then
after
words,
in
1962, further
accounting
research
study
entitled
“Cash
Flow
Analysis
and
the
Funds
Statement”
was
done
which
recommend
the
fund statements
is a compulsory statement in annual reports and reported in
auditor’s opinion (Perry, 1961 p.67).
Next, in 1963, APB (Accounting Principles Board) issued APB 3 which
recommended
changing the
statement’s
name
into
“Statement
of
Source
and
Application of Funds” with which it specifies standard for statement
preparation
and
presentation
(Kinzelle 1990).
However,
according
to APB
(Accounting
Principles
Board),
this
statement
is
only
act
as
a
supplementary
and not a mandatory to be covered in the
financial report.
Beyond expectation,
the
recommendation
of APB3
was
getting
a
strong
support
from financial
reporting company community and was applied by majority of companies to
report statements of source and application.
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