Read the following information to answer. On the basis of case study given below, answer the question which follows: "Mikku on alumni of IIT Delhi initiated his start-up "Gajanan Lid.," in the year 2016. His profit in the year 2020-21 after all appropriation was ₹625000. This profit was arrived after taking the following items into consideration:
Loss on Sale of fixed Assets
₹500000
Goodwill written off
₹380000
Transfer to reserve
₹355000
Provision for tax
₹270000
Interest on Debentures paid
₹165000
Particulars
2020(₹)
2021(₹)
Prepaid Expenses
25000
10000
Accrued interest
40000
68000
Trade payables
700000
400000
Inventories
650000
550000
Cash from operating activities before tax will be:
Options:
₹2738000
₹2082000
₹2378000
₹2862000
Correct Answer:
₹2082000
Explanation:
Profit before Tax ₹1250000 Add: Amortisation 380000 loss on Sale 500000 Interest paid 165000 ₹1045000 Operating Profit before Working Capital = 22, 95,000 change in working capital + Prepaid Exp 15,000 + Stock 1,00,000 - Accrued Int. 28,000 - Trade Payables 3,00,000 (₹213000) Cash flow from operating profit before tax = ₹2082000