Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Cash Flow Statement

Question:

Which of the following will result in a decrease in cash flow from the operations of a company?

Options:

Increase in Creditors

Increase in Debtors

Decrease in Debtors

Decrease in Prepaid Expenses

Correct Answer:

Increase in Debtors

Explanation:

If balance of a current liability increases, or balance of current asset decreases cash flow from operations will increase. If balance of a liability decreases and balance of current assets increases, cash flow from operations will decrease. Thus, here debtors are increased which will make the cash flow from operations to decrease.