Sequence of the items appear in the cash flow statement :

A. Cash and Cash Equivalents at the end of the period.

B. Proceeds from sale of Equipment.

C. Net profit before Tax and Extra ordinary items.

D. Decrease in Trade payable and Increase in Trade Receivables.

E. Amortisation of depreciation and patents.

Choose the correct answer from the options given below :

C, E, D, B, A

The correct answer is Option 2- C, E, D, B, A.

The correct sequence of items appearing in the cash flow statement is as follows:

C. Net profit before Tax and Extraordinary items: This is the starting point for the cash flow statement as it represents the net income generated by the company before considering non-cash items and taxes.

E. Amortisation of depreciation and patents: Depreciation and amortization are non-cash expenses, so they are added back to the net profit to calculate cash flows.

D. Decrease in Trade Payables and Increase in Trade Receivables: Both of these items represent changes in working capital. A decrease in trade payables and an increase in trade receivables would typically result in a cash outflow. They are deducted from the Operating Profit before Working Capital changes to calculate the cash flow from operating activity.

B. Proceeds from sale of Equipment: This represents cash inflow from selling equipment, which is categorized under investing activities. After calculating cash flow from operating activity. Investing activities are taken into consideration.

A. Cash and Cash Equivalents at the end of the period: After calculating cash flow from all three activities(operating, investing and financing) cash and cash equivalents is added to it to calculate the cash and cash equivalents at the end. This represents the closing balance of cash and cash equivalents after all cash inflows and outflows have been accounted for.

The correct sequence of preparing cash flow statement-
(A) Cash flows from operating activities
(B) Cash flows from investing activities
(C) Cash flows from financing activities
Net increase (decrease) in cash and cash equivalents (A + B + C)
+ Cash and cash equivalents at the beginning
= Cash and cash equivalents at the end.