CUET Preparation Today
Read the following passage and answer the question. A company has a net profit after tax of ₹5,60,000 in the current year 2022. Company write off the bad debts of ₹5,000 during the year. Depreciation charged on fixed assets is ₹40,000. Company sold the investments and a gain of ₹10,000 arise. The following details are given-
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What is the net cash flow from operating activities? |
₹5,98,000 ₹6,45,000 ₹6,04,000 ₹5,60,000 |
₹5,98,000 |
The correct answer is option 1- ₹5,98,000. Cash flow statement
* Note 1- Provision for tax for the 2022 is added back to profit to calculate the profit before tax. So, profit before tax is 5,60,000 + 25,000 = 5,85,000 * Note 2- Provision for tax for the year 2021 means ₹16,000 will be treated as payment of tax and deducted from the cash generated from operating activities to calculate the net cash flow from operating activities. * Note 3- Trade receivables are to be adjusted for the bad debts. Trade receivables decreased by 25,000 (70,000 - 5,000 - 90,000). |
