Cash flow

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Amol Gadekar

Amol Gadekar (Querist)
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08 October 2013 Bank CC A/c. What We Treat it in? Cash Equivalents or Secured Loans? for Pub.ltd.co.

CA Pallav Singhania

CA Pallav Singhania (Expert)
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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,

Sanket

Sanket (Expert)
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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

Sanket

Sanket (Expert)
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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.

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