ABSTRACT
Cash flow accounting (CFA) has a considerable number of identifiable features which suggest its reporting potential in terms of improving the utility of financial reports. It is based on a matching of periodic cash inflows and outflows, free of credit transactions and arbitrary accounting allocations. The suggestion of a corporate financial reporting system based on cash flows has been underpinned by the fundamental concepts of utility and relevance. CFA data comprised one of the information sets provided, and it was found that the companies were ranked considerably differently by shareholders who received CFA data only, compared with those who received historic cost, allocation-based equivalents or a mixture of both. This can be done relatively easily, and CFA's utility can be reasonably demonstrated at a conceptual level and, increasingly, at an empirical level. A relatively few accountants have achieved this position and, as such, CFA has been argued for at least as consistently as any other system of accounting.
