Target Exam

CUET

Subject

-- Accountancy Part B

Chapter

Cash Flow Statement

Question:

While calculating cash flow from operating activities in the cash flow statement of a company which will be deducted from the net profit?

Options:

Decrease in Prepaid Expenses

Decrease in Debtors

Increase in Debtors

Increase in Creditors

Correct Answer:

Increase in Debtors

Explanation:

The correct answer is option 3- Increase in Debtors.

Increase in Debtors is deducted from the net profit while calculating cash flow from operating activities in the cash flow statement of a company.

All others are added.

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 in the net profit while calculating cash flow from operating activities in the cash flow statement of a company.