How is short-term provisions for tax treated while computing cash from operations?

Open in App

Solution

Short-term provision for tax is added back to the net profit as such entries do not cause any outflow of cash.

Suggest Corrections

Similar questions

Which of the following items is not considered while computing Cash Flow from Operating Activities:

Q. Compute Cash Flow from Operating Activities from the following information:


Particulars	₹
Net Profit after Provision for Tax and Payment of Dividend	2,15,000
Provision for Tax	45,000
Final Dividend paid during the year	50,000
Depreciation	25,000
Loss on Sale of Machinery	10,000
Patents Amortised	30,000
Gain on Sale of Land	70,000
Income Tax Refund	30,000

Prepare Provision for Income Tax Account from the following informations for preparing Cash Flow Statements:
$\begin{matrix} Particulars & 31 - 03 - 2016 & 31 - 03 - 2017 Rs. & Rs. Provision for Income Tax & 3, 20, 000 & 4, 00, 000 \end{matrix}$

Additional Information:
During the year Income Tax paid was Rs. 2,80,000

How will you record increase in Provision for Doubtful Debts while preparing Cash Flow Statement?

Q. When operating profit Rs.

62, 400

, provision for depreciation Rs.

10, 000

, Provision for taxation Rs.

30, 000

, Refund of tax Rs.

400

, Provision for doubtful debts Rs.

1000

, Office of admin. expenses Rs.

50, 000

then the amount of funds from operation is__________.

Join BYJU'S Learning Program