UK Why CASH at the end of the year in Cash Flow Statement is not the same as in Balance sheet


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kirby

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At the end of the year, cash was overdrawn by 15,000. So cash account was reclassed to the Liabilities Account: “Bank Overdraft” shown as a 15,000 liability.
 
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It is Cash and CASH EQUIVALENTS.

In this case, the overdraft is considered as a cash equivalent.

According to IAS 7, if the overdraft is continually overdrawn, then it should be classified as a source of finance, and not a cash equivalent.

However, in this case, it would be reasonable to class it as a CE, as it was zero balance in the previous period.
 

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