Cash and cash equivalents comprise cash on hand and demand deposits, as well as short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. [IAS 7 para 6]. Cash and cash equivalents are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes. [IAS 7 para 7].

Cash and cash equivalents must be readily convertible to known amounts. Funds subject to restrictions on use, such as deposits received from lessees, or cash held in blocked accounts, will be presented as cash and cash equivalents in the statement of financial position and in the cash flow statement when they meet the definition of either cash or cash equivalents, which will depend on the nature and severity of the restrictions. An entity may disaggregate cash and cash equivalents subject to contractual restrictions in the statement of financial position when this information is relevant to an understanding of the financial position. Disclosure of restrictions on cash or cash equivalents may also be required.

Further guidance on cash flows from operating activities can be found in the PwC Manual of Accounting chapter 7 paragraphs 19–26.

Further guidance on cash flows from investing activities can be found in the PwC Manual of Accounting chapter 7 paragraphs 27–29.

Further guidance on cash flows from financing activities can be found in the PwC Manual of Accounting chapter 7 paragraphs 30–32.