Arrange the following Cash Flows from Operating Activities in sequence as per indirect method-
(A) Income Tax Paid
(B) Net Profit/Loss before Tax and Extraordinary Items
(C) Operating Profit before Working Capital changes
(D) Effects of Extraordinary Items relating to operating activity
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 2
The correct answer is option 2- (B), (C), (A), (D).
(B) Net Profit/Loss before Tax and Extraordinary Items
(C) Operating Profit before Working Capital changes
(A) Income Tax Paid
(D) Effects of Extraordinary Items relating to operating activity
Performa of calculating cash flows from operating activities as per indirect method.
| Particulars | Amount | |
| Net Profit/Loss before Tax and Extraordinary Items | ||
| Add | Deductions already made in Statement of Profit and Loss on account of Non-cash items such as Depreciation, Goodwill to be Written-off. |
|
| Add | Deductions already made in Statement of Profit and Loss on Account of Non-operating items such as Interest. |
|
| Less | Additions (incomes) made in Statement of Profit and Loss on Account of Non-operating items such as Dividend received, Profit on sale of Fixed Assets. |
|
| Operating Profit before Working Capital changes | ||
| Less | in case of increase in current assets (other than cash and cash equivalent) and decrease in current liabilities | |
| Add | in case of decrease in current assets (other than cash and cash equivalent) and increase in current liabilities. | |
| Cash Flows from Operation Activities before Tax and Extraordinary items | ||
| Less | Income Tax Paid | |
| +/– | Effects of Extraordinary Items | |
| Net Cash from Operating Activities |