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Cash Flow Statement

Nitin Singhal (Student) (56 Points)

21 September 2008

How should bank overdraft be treated in CFS?should it be considered as a part of financing activities or as part of cash and cash equivalents?

Anyone having authentic and accurate information please answer.its really a debating matter.

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4 Replies

Anup (C.A Final Student) (70 Points)
Replied 21 September 2008

Originally posted by :Nitin Singhal
"	How should bank overdraft be treated in CFS?should it be considered as a part of financing activities or as part of cash and cash equivalents? Anyone having authentic and accurate information please answer.its really a debating matter.	"

Well According to me if the O.D is prisisting one i.e., Cash Credit Limit it should be treated as Cash equivalents. If its an temporary arrangements it should be treated as part of Financing activities.

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CA Mohit Mohan (c.a. profession) (557 Points)
Replied 22 September 2008

From exam point of view:- If Cash in hand Or bank balance is given then treat bank overdraft as a current liability.

If Cash in hand and Bank balance both are given then treat it as CASH EQUIVALENT.

We cant take it as financing activity in any case.

CA Mohit Mohan (c.a. profession) (557 Points)
Replied 22 September 2008

sorry one typing mistake in above

From exam point of view:- If Cash in hand Or bank balance is given then treat bank overdraft as a current liability.

If Cash in hand and Bank balance both are not given then treat it as CASH EQUIVALENT.

We cant take it as financing activity in any case.

Nitin Singhal (Student) (56 Points)
Replied 22 September 2008

Hey guys thanks for replying.But I m sorry i m not al all satisfied with these answers.I have read a few books and also searched net regarding this matter but there seems to be lot of controversy over this.In some books,it is treated as a part of cash equivalent whereas in some others it is treated a part of financing activities.PLZ do some RESEARCH and reply PLZ.its really a debating matter.