Perspectives on the Cash Flow Statement under FASB Statement No. 95

This paper demonstrates that the current FASB cash flow statement classification rules are simplistic and wrought with internal contradictions, in part because they do not distinguish between financial and non-financial enterprises. Among other recommendations, the paper favors changing the classification rules to (1) require income tax allocation in the cash flow statement; and (2) distinguish between financial and non-financial enterprises.

Hugo Nurnberg is Professor of Accountancy at the Zicklin School of Business, Baruch College, City University of New York.