If the net profit earned during the year is ₹1,00,000 and the amount of bills receivables in the beginning and the end of the year is ₹20,000 and ₹40,000 respectively, then cash flow from operating activities will be:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → ₹80,000
Bills receivable are a current asset. When they rise, part of the profit is still due from customers and has not come in as cash, so the increase is deducted from net profit.
Increase in bills receivable = ₹40,000 − ₹20,000 = ₹20,000
Cash flow from operating activities = ₹1,00,000 − ₹20,000 = ₹80,000
Adding the increase (₹1,20,000) is the common slip: a rise in a current asset holds cash back, so it is subtracted.
NCERT (2026-27 edition):
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