26 October 2010
Sir, if the tax provision for 2009&2010 is Rs.180 &Rs.200 respectively and advance tax is Rs.180&Rs.195 respectively(in balance sheet)and tax provision in P/L is Rs.200;what will be the amount of tax paid in cash flow statement under operating activities?please explain. i can't understand.
Simple logic of Preparing a cash flow Statement is to analyse how much actually cash or bank went out of your hand during the period under consideration.
In your ques if you are preparing cashflow for 2010 then u have to analyse how much u actually paid tax during the year ended 2010 ( it does not matter for which year u are paying ). In your case it is Rs 195/- that is to be shown as amount paid for taxes under the head OPerating cash flows.
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