Match the following for an enterprise while making a cash flow statement:
| LIST 1 | LIST 2 |
| A) Increase in current assets | I) Cash outflow |
| B) Increase in current liabilities | II) Cash inflow |
| C) Issue of debentures | III) Added to operating profit before working capital changes |
| D) Purchase of own debentures | IV) Deducted from operating profit before working capital changes |
Choose the correct answer from the options given below.
Answer & explanation
Correct answer: option 3
The correct answer is option 3- A-IV, B-III, C-II, D-I
| LIST 1 | LIST 2 |
| A) Increase in current assets | IV) Deducted from operating profit before working capital changes |
| B) Increase in current liabilities | III) Added to operating profit before working capital changes |
| C) Issue of debentures | II) Cash inflow |
| D) Purchase of own debentures | I) Cash outflow |
* Increase in current assets and Increase in current liabilities- An increase in current assets and a decrease in current liabilities are to be deducted while increase in current liabilities and decrease in current assets are to be added up.
* Issue of debentures- The issue helps the company to get cash whereas purchase makes the company to give cash.
* Purchase of own debentures- Purchase makes the company to give cash.