Bank borrowings are normally classified in the statement of cash flows as:
A) financing activities, except for bank overdrafts that are repayable on demand.
B) financing activities, except for bank overdrafts that are repayable on demand and which form an integral part of an entity's cash management.
C) operating activities, except for bank overdrafts that are repayable on demand and which form an integral part of an entity's cash management.
D) investing activities, except for bank overdrafts that are repayable on demand and which form an integral part of an entity's cash management.

Question

Quizplus · Accepted Answer

Bank borrowings are typically used for financing activities and should be classified as such in the statement of cash flows. However, bank overdrafts that are repayable on demand and used as part of an entity's cash management are considered part of operating activities and should be excluded from the financing activities section. Therefore, option B is the correct answer as it excludes such overdrafts from the financing activities section.

Bank Borrowings Are Normally Classified in the Statement of Cash