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cash flow statement

ayushee dey (CA Final Student) (161 Points)

06 November 2010

Hi Everyone...

I ve a doubt regarding the treatment of "Drawings" in the cash flow statement, under Direct and Indirect method.

PLZ HELP

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6 Replies

(Guest)

i think DRAWING should be treated as financing activity and should be deducted as outflow in both direct and indirect method

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ayushee dey (CA Final Student) (161 Points)
Replied 07 November 2010

i also think so but not sure.............

CA Lokesh Pokharna (CA (Ahmedabad Bhilwara Chittorgarh)) (4128 Points)
Replied 07 November 2010

FIRSTLLY CASH FLOW PREPARTION IS MANDATORY FOR CORPORATES AND DRAWINGS NOT OCCURE IN THAT CASE.... BUT IN THE CASE OF INDIVIDUAL B/S DRAWINGS OCCURE.HENCE CONCEPTUALLY I THINK IT SHOULD BE TREATED AS FINANCING ACTIVITY ( IF IT IS HAPPEN NOT REGULARLLY). BUT IT OCCURING REGULARLLY THEN IT SHOULD B TREATED AS OPERATING ACTIVITIES

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Nikunj Gupta (Articled Assistant ) (39 Points)
Replied 07 November 2010

Lokesh,

as per logic, drawings cannot be treated as operating because it is the amount that the proprietor withdraws throughout the year. It is as good as his remuneration. As he is the provider of Capital (When no loan has be taken) it shall be a financing activity.

Regards

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