Practicing Success
If net profit is Rs 35,000 after writing off goodwill Rs 6,000 and loss on sale of computer Rs 2,000, cash flow from operating activities will be: |
₹35000 ₹37000 ₹41000 ₹43000 |
₹43000 |
To calculate cash flow from operating activities using the indirect method, we have to start with net profit and then adjust for non-cash expenses and losses. In this case, we have to add back the goodwill write-off and the loss on the sale of a computer to the net profit. |