As per AS-3, arrange the following items in top to down order of the cash flow statement format according to indirect method.
A. Increase in Current Assets
B. Depreciation of the fixed assets
C. Purchase of Machinery
D. Issue of equity shares by the company
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → B, A, C, D
A cash flow statement shows operating activities first, then investing, then financing. Under the indirect method the operating section starts from net profit, adds back non-cash items such as depreciation to reach operating profit before working capital changes, and only then adjusts for changes in current assets and liabilities.
(B) Depreciation of the fixed assets — added back to net profit, before working capital changes.
(A) Increase in Current Assets — deducted after operating profit before working capital changes, still in operating activities.
(C) Purchase of Machinery — an investing activity outflow.
(D) Issue of equity shares by the company — a financing activity inflow.
NCERT (2026-27 edition):
NCERT (2026-27 edition):
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