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Question : For calculating 'cash flow from operating activities' from the given figure of 'Net Profit' earned during a year, how would you deal with, if decrease in Bills Payable,

Option 1: Added

Option 2: Deducted

Option 3: Both A and B

Option 4: None of the above


Team Careers360 23rd Jan, 2024
Answer (1)
Team Careers360 24th Jan, 2024

Correct Answer: Deducted


Solution : Answer = Deducted

When calculating cash flow from operating activities, a decrease in bills payable represents a decrease in liabilities, indicating cash outflow. Therefore, it should be deducted from net profit. This adjustment reflects the actual cash impact of changes in bills payable on the company's operating cash flow.
Hence, the correct option is 2.

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