Bank overdrafts are reported in the cash flow statement under financing activities. In the cash flow statement, financing activities refer to the cash inflows and outflows related to the company’s financing activities, including debt and equity financing.

When a company incurs bank overdrafts, it means that they have borrowed money from the bank and owe it to the bank. The amount of the overdraft will be reported as a cash outflow in the financing activities section of the cash flow statement.

For example: If a company had a bank overdraft of $10,000 at the beginning of the year, and then borrowed an additional $5,000 during the year, their total borrowing would be $15,000. If the company repaid $7,000 of the overdraft during the year, its total borrowing would decrease to $8,000.

The cash flow statement would show the $5,000 borrowed as a cash inflow, and the $7,000 repayment as a cash outflow, resulting in a net cash outflow of $2,000 for the bank overdraft for the year. This net cash outflow would be included in the financing activities section of the cash flow statement.

In summary, bank overdrafts are reported in the cash flow statement under financing activities as a cash outflow when the company borrows money and a cash inflow when they repay the borrowing.