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Treatment of provision for bad debts in cash flow statement

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Jai Ganesh (Querist)
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23 October 2017 Hii
Can you explain me the treatment of 'Provision for Bad debts' in Cash flow statement under indirect method?
My assumption is that the prov. debited in P&L A/C is to be added back as non cash item and the changes in the Balance of the Prov. A/C as per the Balance sheet is to be added or subtracted accordingly as 'Changes in Working capital'
Is my assumption right?
Pls explain with a suitable example

Thank you
Jai Ganesh A
(Student- CA-IPCC)

Dheeraj Rinwa

Dheeraj Rinwa (Expert)
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11 November 2017 There is two alternative for this it is advisable that you should do netting of Sundry Debtors closing balance which itself includes provision for Bad & doubt ful debts adjustment. So do not do any thing with provisions consider it as Working capital changes.

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