As per AS 3 (Revised) while preparing cash flow statement the correct sequence to be followed is:

A. Calculation of Cash flow from Financing Activities
B. Calculation of cash flow from Operating Activities
C. Calculation of cash flow from Investing Activities
D. Calculation of net changes in cash and cash equivalents during the year
E. Calculation of net profit before tax and extra-ordinary items

Choose the correct answer from the options given below:

E, B, C, A, D

The correct answer is Option (2) → E, B, C, A, D.

E. Calculation of net profit before tax and extra-ordinary items

B. Calculation of cash flow from Operating Activities

C. Calculation of cash flow from Investing Activities

A. Calculation of Cash flow from Financing Activities

D. Calculation of net changes in cash and cash equivalents during the year

This is the correct sequence of preparing cash flow statement-
(I) Cash flows from operating activities
(II) Cash flows from investing activities
(III) Cash flows from financing activities
Net increase (decrease) in cash and cash equivalents (I+II+I+III)
+ Cash and cash equivalents at the beginning
= Cash and cash equivalents at the end.

* Before calculating cash flow from operating activity, net profit before tax and extra ordinary item is calculated.