Section 41 in The Companies (Accounting Standards) Rules, 2006
41. Many investing and financing activities do not have a direct impact on current cash flows although they do affect the capital and asset structure of an enterprise. The exclusion of non-cash transactions from the cash flow statement is consistent with the objective of a cash flow statement as these items do not involve cash flows in the current period. Examples of non-cash transactions are:
(a)the acquisition of assets by assuming directly related liabilities;(b)the acquisition of an enterprise by means of issue of shares; and(c)the conversion of debt to equity.Components of Cash and Cash Equivalents
