The correct answer is Option (2) - (B), (E), (A), (C), (D).
This is the correct sequence of preparing cash flow statement-
(1) Cash flows from operating activities
(2) Cash flows from investing activities
(3) Cash flows from financing activities
Net increase (decrease) in cash and cash equivalents (1 + 2 + 3)
+ Cash and cash equivalents at the beginning
= Cash and cash equivalents at the end.
CASH FLOW FROM OPERATING ACTIVITIES-
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.
DEDUCT: 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
Add : in case of increase in current assets (other than cash and cash equivalent) and decrease in current liabilities.
Less : in case of decrease in current assets (other than cash and cash equivalent) and decrease in current liabilities.
Cash Flows from Operation Activities before Tax and Extraordinary items
– Income Tax Paid
+/–Effects of Extraordinary Items | 
