How to treat advance tax in cash flow statement
ASHOK MERUVA (student ca final) (74 Points)
16 July 2012ASHOK MERUVA (student ca final) (74 Points)
16 July 2012
lakshmikant
(student)
(44 Points)
Replied 16 July 2012
Pawandeep Singh Ohsan
(CA Acconts Officer)
(33 Points)
Replied 17 July 2012
as far as provisions are concerned Difference of provisions Rs.422255 should be added and difference of advance tax Rs.100000 should be subtracted in operating activity.
N.Naveena Maheswara Rao
(Assistant manager for accounts)
(1096 Points)
Replied 18 July 2012
You should see the P&L A/c to find out the provision for tax.If nothing is given in the problem, we should assume that last year liability paid off in the current year and closing liability is the provision for current year.
Hence Current year Provision to be added back is Rs.1372566 and
Income tax paid to be deducted after working capital changes is Rs.1050311
(i.e opening provision(net of advance tax) of Rs. 311 + Cy Provision of Rs. 1372566 - Cl Provision(net of advance Tax) of Rs. 352566.
Income Tax paid = Op. Provision + CY provision made - Cl. Provision
OVERALL AS SAID BY PAWAN OPERATING PROFIT WILL BE DECREASED BY RS. 322255 (1372566 - 1050311)
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