Cash flow
This query is : Resolved
Amol Gadekar
(Querist)
08 October 2013
Bank CC A/c. What We Treat it in? Cash Equivalents or Secured Loans? for Pub.ltd.co.
CA Pallav Singhania
(Expert)
08 October 2013
The Cash Credit availed from bank shall form part of Financing Activity.
However,the Bank Overdraft shall form part of Cash and Cash Equivalents.
regards,
However,the Bank Overdraft shall form part of Cash and Cash Equivalents.
regards,
08 October 2013
In my opinion , the Bank Overdraft shall form
part of Cash and Cash Equivalents . However ,
the Cash Credit availed from bank shall form
part of Financing Activity. Many a times ,
people confuse with Bank OD and Cash Credit
and consider the same on equal footings
part of Cash and Cash Equivalents . However ,
the Cash Credit availed from bank shall form
part of Financing Activity. Many a times ,
people confuse with Bank OD and Cash Credit
and consider the same on equal footings
08 October 2013
As per AS -3 , Cash equivalents include
demand deposits with banks . Demand deposit
necessarily means the deposits which can be
demanded later on . Bank overdraft( Negaative
balance in A /c . ) is not a deposit .
Further, Under GAAP , changes in overdraft
balances - sources of cash from increasing
overdraft balances or uses of cash forreducing
them - should be reported as financing
activities on the statement of cash flows .
Also , in balance sheet we prefer different
treatment to bank deposits & bank overdrafts .
Any balance with bank is shown under the
head " Cash & Bank Balance " while Bank O /d
is always shown as a current liability.
And as per Financial Accounting Standard No.
95 ( Statement of Cash Flows ) , cash balances
on the cash flow statement should relate to
the amounts reported on the balance sheet.
demand deposits with banks . Demand deposit
necessarily means the deposits which can be
demanded later on . Bank overdraft( Negaative
balance in A /c . ) is not a deposit .
Further, Under GAAP , changes in overdraft
balances - sources of cash from increasing
overdraft balances or uses of cash forreducing
them - should be reported as financing
activities on the statement of cash flows .
Also , in balance sheet we prefer different
treatment to bank deposits & bank overdrafts .
Any balance with bank is shown under the
head " Cash & Bank Balance " while Bank O /d
is always shown as a current liability.
And as per Financial Accounting Standard No.
95 ( Statement of Cash Flows ) , cash balances
on the cash flow statement should relate to
the amounts reported on the balance sheet.
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