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Cash flow statement.
If provision for bad debts is given in the liability side of balance sheet, what will be the treatment of provision in cash flow statement?
Replies (3)
Since Provision for bad Debts is non cash item no adjustmemt in cash flow is required.
In Case Current Yeay any Provisiom is done for debtors as doubtfull, same should be adjusted in working capital to ensure cash collection from debtors is not inflated due to this adjustments.
In Case Current Yeay any Provisiom is done for debtors as doubtfull, same should be adjusted in working capital to ensure cash collection from debtors is not inflated due to this adjustments.
How to prepare Cash Flow Statement (Complete Practical Guide) Click on below link
https://youtu.be/2i_culGgO8o
https://youtu.be/2i_culGgO8o
Hi Himanshi,
If you are preparing Cash Flow statement with indirect method and there is an increase in provision of bad debt in current year, please add back this amount to Net Income/Loss.
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