11 June 2010
I am really confused about treatment of advance tax in cash flow statement. What are the different treatment when advance tax paid is given in adjustments and when it is already given in balance sheet. How do we present them in cash flow statement in these two cases? Pls help me.thanks
15 June 2010
For that u need to understand the entries of provision for taxation A/c and Advance tax A/c. e.g. Provision for taxation A/c To Advance Tax XX By bal. b/f xx (amount adjusted)
16 June 2010
but mam this entry will be passed on completion of assessment. In a question related to cash flow statement im given in adjustments that: the company paid advance tax Rs. 70 lacs for the current year. how will i show its treatment in cash flow statement?
18 June 2010
Dear, I had given two full A/c of provision 4 tax and adv. tax but don't know what was the problem. the above things are only two lines given to me. I will again give u the details of the two a/c within a day or two.
22 June 2010
Hi Dear, It seems that u r doing the question of Mr. Azad which was once asked in CA Finals.Check the following : Provision for taxation A/c Rs. Rs. To Advance Tax (Amt. Adj)* XX By Bal. B/f (op. Bal. Sheet) XX To Bank / Tax payable A/c (diff. between Assessed tax n advance tax for relevant yr-if not paid, will be shown as current liability) XX By Profit and Loss A/c (current yr. tax provision) XX To Profit and Loss A/c(excess provision-diff between provision and assessed tax) XX By Profit and loss A/c(Short provision-diff. between Assessed tax and provision) XX To Bal c/f (Cl. Bal Sheet) XX XX XX XX
Advance Tax A/c Rs. Rs. To Bal. b/f(Op. Bal. Sheet) XX By Prov. For Tax A/c (amount adjusted against assessed tax)* XX To Bank A/c (Advance tax paid during yr.) XX By Bal c/f (Cl. Balance Sheet) XX XX XX
I tried my level best to give it in account format but i don't know where m i going wrong. But anyway u can see the names of two accounts with To and By entries. so u can frame accounts.If u hv any problem then send me ur mail id. I will send u the proper format. In the above two, wherever i write to/by Bank, that will be shown as tax paid under funds from operating activities whereas the amount provided for the yearin provision for tax A/c cr side will be added back to profits / Dr. side deducted from profits as the case may be. If u hv any further doubt, revert back to me. Regards, CA Shakuntala Chhangani
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