Arrange the following activities in correct order while preparing Cash Flow Statement.

A. Increase in prepaid Insurance.

B. Purchase of copyrights

C. Operating profit before working capital changes

D. Income tax paid

E. Redemption pf preference shares.

Choose the correct answer from the options given below :

C, A, D, B, E

The correct answer is option 2- C, A, D, B, E.

Operating profit before working capital changes (C): This reflects the core cash generation from the company's operations. It is calculated after doing adjustments for non-cash and non-operating items in net profit before tax.

Increase in prepaid Insurance (A): This represents a decrease in cash flow as the company pays for insurance coverage in advance. It's considered an operating activity as it impacts the day-to-day operations. An increase in current assets and decrease in current liabilities are to be deducted while increase in current liabilities and decrease in current assets are to be added up to Operating profit before working capital changes.

Income tax paid (D): This represents a cash outflow related to the company's tax obligations. It's classified as an operating activity as it's a direct expense incurred from regular business operations. After calculating the cash generated from operations income tax paid is deducted to know the net cash from operating activity.

Purchase of copyrights (B): This is an investing activity, indicating a cash outflow for acquiring an intangible asset.

Redemption of preference shares (E): This is a financing activity, signifying a cash outflow used to repurchase preference shares from shareholders. It affects the company's capital structure and financing arrangements.