Question

i. Bank overdrafts are reported under financing activities when preparing cash flow statement. Do you agree? Justify with reasons. [2]​

Answer 1

Yes, I agree with the statement: Bank overdrafts are reported under financing activities when preparing cash flow statements.

Step-by-step explanation:

This criterion often classifies an increase or decrease in bank overdrafts as a financing activity. Both an increase in bank overdrafts and a decrease in bank overdrafts will be represented as cash inflows and outflows from financing activities.

As an alternative, it might be considered a part of the entity's cash management, together with cash and cash equivalents.