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 increase in Trade Payables
Option 1: Added
Option 2: Deducted
Option 3: Both A and B
Option 4: None of the above
Correct Answer: Added
Solution : Answer = Added
When calculating cash flow from operating activities, an increase in trade payables is added back to net profit. This adjustment accounts for the fact that an increase in payables represents cash that hasn't been spent yet, thus increasing operating cash flow when reconciling net profit to cash flow. Hence, the correct option is 1.
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 Increase in Trade Receivables?
Option 3: Both 1 and 2
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 Inventory?
Regular exam updates, QnA, Predictors, College Applications & E-books now on your Mobile