If the net operating profit of the business is Rs. 90,000 and the debtors have decreased during the year by Rs. 40,000. Cash from operations is:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Rs. 1,30,000
A decrease in debtors means customers paid more in cash than the credit sales of the year, so cash received is more than the profit shows. A decrease in a current asset is added to the operating profit.
Net operating profit = Rs. 90,000
Add: Decrease in debtors = Rs. 40,000
Cash from operations = Rs. 90,000 + Rs. 40,000 = Rs. 1,30,000
NCERT (2026-27 edition):
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