Is a bank overdraft included in the cash flow statement.?
Bank overdraft is treated as cash and cash equivalent. The reason behind this is that the facility is used to meet day to day finances of a business. In practice, the businesses have a number of bank accounts. Some of them have favorable balances while others many have overdraft facilities. When preparing a cash flow statement, the cash and cash equivalents at the beginning and end of a period are compared with the net increase/decrease arising of operating, investing and financing activities. Bank loan is slightly different since its terms and conditions will govern its disclosure as a financing activity.
