ABSTRACT
Contrary to what some American scholars seem to suppose, cash flow accounting and analysis constituted an important focus for academic research outside the U.S.A. for more than a decade before the Financial Accounting Standards Board promulgated FAS 95, Statement of Cash Flows, in November 1987. In fairness it should be added that the publication of FAS 95 reflected a fairly quick and radical change of mind on the part of the FASB. Thus, verbal evidence given by the writer at the FASB public hearings in New York in the Spring of 1981, which elaborated an earlier written submission advocating the (Lawson) cash flow statement format described in chapter 1, met with the response that cash flow reporting would cause ‘a costly information overload.’ At that time the FASB’s point of view probably still reflected the assumption that accruals and cash flow reports are mutually exclusive. (See, for example, Statement of Accounting Concepts, No.1, 1978). Thus, “Information about enterprise earnings based on accrual accounting generally provides a better indication of an enterprise’s present and continuing ability to generate favorable cash flows than information limited to the financial aspects of cash receipts and payments”.
