While computing cash from operating activities, which of the following will not be considered while calculating the Net profit?
A. Increase in value of creditors
B. Decrease in income received in advance
C. Decrease in value of inventory
D. Increase in value of patent
E. Issue of share
Choose the correct answer from the option given below:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) - D and E only.
A. Increase in value of creditors- This is an operating activity. Increase in current liability is added.
B. Decrease in income received in advance- This is an operating activity. Decrease in current liability is deducted.
C. Decrease in value of inventory- This is an operating activity. Decrease in current asset is added.
D. Increase in value of patent- This is an investing activity.
E. Issue of share- This is a financing activity.
Thus statement D & E are not considered.