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
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.
CAclubindia
