Target Exam

CUET

Subject

-- Accountancy Part B

Chapter

Cash Flow Statement

Question:

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

Options:

Increase in Stock

Increase in Creditors

Decrease in Bills Payable

Increase in Debtors

Correct Answer:

Increase in Creditors

Explanation:

The correct answer is option 2- Increase in Creditors.

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 creditors are increased which will make the cash flow from operations to increase.