Go AD-Free with CAclubindia Pro and get a FREE CCI Coffee Mug. Subscribe Now!

Cash flow statement.

09 December 2019

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?

Reply
Follow
Share

3 Replies

Ravi Duseja (Article) (132 Points)
Replied 10 December 2019

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.

Upgrade to CAclubindia Pro. Subscribe Now!

SOHAN LAL (Manger Accounts & Finance) (363 Points)
Replied 19 May 2020

How to prepare Cash Flow Statement (Complete Practical Guide) Click on below link

https://youtu.be/2i_culGgO8o

TAPASYA (CA) (297 Points)
Replied 23 May 2020

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.

I greatly enjoyed answering your question.

Thought it would be interesting to connect on LinkedIn for more such discussions https://www.linkedin.com/in/ca-tapasya-bakshi-50545491/

Thanks!