Treatment of provision for bad debts in cash flow statement
This query is : Open
Jai Ganesh
(Querist)
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)
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
(Expert)
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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