Hi Everyone, could anyone please throw some light on how the company will deal in its CFS "bank interest/bank charges" ? whether it will become a part of operating, investing & financing or it will be adjusted in cash & bank balance opening/closing?
guys this question was asked in an interview, pls reply ..
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Bank interest/bank charges in cash flow statement
Replies (5)
It is usually classified into operating activities. But there is no clear classification and this could be into other activities as well.
Generally interest will be a financing activity, not an operating activity for cash flow statement!
But what if the interest on bank loan are taken by company?..in this case interest was already deducted from profit as we take PBT if we follow indirect method in CFS..pls advise
It falls under operating activities.
Any lease payments will fall under financing activities.
Interest received will fall under investment activities.
Mostly, Interest when shown as an expense on income statement, it is operating Cashflows.
@ rahul First add the interest amount debited to P&L a/c in Operating activities. Then less the same amount in financing activities .
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