yoka (Chennai) (45 Points)
15 January 2011How do u treat insurance and pre paid insurance while preparing cash flow statement in operating activite?
In a problem(practise manual sum no 2 cs statement paduka sum no 3) pre paid insurance is shown in WC changes where as insurance is not adjusted at all y?
Manmohan ACA, CS
(Chartered Accountant )
(14243 Points)
Replied 15 January 2011
Insurance debited to profit and loss Account No need to make any adjustment assuming it is incurred for operating activity.
(Closing Pre paid insurance premium less opening Pre paid insurance premium) ,if positive , then subtracted as Increase in Current assets. AND ,if negative , then added as decrease in Current assets.
ROHIT CHATURVEDI
(CA Final Student )
(2298 Points)
Replied 15 January 2011
the purpose of insurance is to prevent our business from uncertainties....that means to carry out our business activities smoothly.....that is to say that the purpose is operative......hence no adjustment is regarded of insurance in CFS
On the other hand prepaid insurance is our current asset and hence the adjustment of same is required in working capital changes.........if there is an increase in the amount of prepaid insurance from the opening balance then it is to be deducted and vice versa
yoka
(Chennai)
(45 Points)
Replied 16 January 2011
thanks guys for ur answers i wud like to know de sources from where got these info?
ROHIT CHATURVEDI
(CA Final Student )
(2298 Points)
Replied 19 January 2011
source - class 12th study
Atul Sharma
(STUDENT)
(26 Points)
Replied 06 March 2011
Can anyone will plz suggest me that when to take Interest on Debenture in cash flow statement ???
Y@$#u
(ipcc group 2, article)
(683 Points)
Replied 16 March 2011
| Originally posted by : ROHIT CHATURVEDI | ||
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the purpose of insurance is to prevent our business from uncertainties....that means to carry out our business activities smoothly.....that is to say that the purpose is operative......hence no adjustment is regarded of insurance in CFS On the other hand prepaid insurance is our current asset and hence the adjustment of same is required in working capital changes.........if there is an increase in the amount of prepaid insurance from the opening balance then it is to be deducted and vice versa |
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