Treatment of Capital Reserve in Cash Flow Statement

Share your love

Confused, what is the accounting treatment of Capital Reserve in Cash Flow Statement.

Let’s first understand

Table of Contents

What is Capital Reserve

Capital Reserve is the reserve that is prepared by the capital profits arising from transactions of capital nature.

Read More:- Treatment of Provision for Taxation in cash flow statement

Read More:- Treatment of Short Term loans and advances in Cash Flow Statement

Where Capital Reserve go in Cash flow statement.

As the capital reserve is not made through regular profit. Thus it is not added or subtracted to arrive at a net profit before tax and extraordinary items.

It is neither an operating, investing, or financing activity.

Thus the amount of Capital Reserve is not considered anywhere in the cash flow statement.

In short, just ignore the amount of capital reserve if given in the question while preparing cash flow statement.

Read More:- Treatment of Interim Dividend in Cash flow statement

Read More:- Treatment of Preliminary Expenses in Cash Flow Statement

Read More:- Treatment of Share Issue Expenses in Cash Flow Statement

Read More:- Treatment of Discount (Loss) on Issue of Debentures in cash flow statement.

Read More:- Treatment of Underwriting Commission in Cash Flow Statement

Share your love
Default image
Anurag Pathak

Anurag Pathak is an academic teacher. He has been teaching Accountancy and Economics for CBSE students for the last 18 years. In his guidance, thousands of students have secured good marks in their board exams and legacy is still going on. You can subscribe his youtube channel and can download the Android & ios app for free lectures.

Articles: 2276

Leave a Reply

Your email address will not be published.

close

Ad Blocker Detected!

Our Website is made possible by displaying online advertisements to our visitors. Please consider supporting us and remove the AD - Blocker to read this article.

Refresh