Accountancy Part BCash Flow Statement

Arrange the following activities in correct sequence while preparing…

Arrange the following activities in correct sequence while preparing the Cash Flow Statement.

A. Cash flow from Investing Activities

B. Cash flow from Operating Activities

C. Profit before tax and Extraordinary items

D. Cash flow from Financing Activities

E. Cash and Cash Equivalents

Choose the correct answer from the options given below :

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → C, B, A, D, E

(C) Profit before tax and Extraordinary items – the starting point of the indirect method.

(B) Cash flow from Operating Activities – worked out from that profit after the adjustments.

(A) Cash flow from Investing Activities – the second main head.

(D) Cash flow from Financing Activities – the third main head.

(E) Cash and Cash Equivalents – the net change is added to the opening balance to reach the closing cash and cash equivalents.

NCERT (2026-27 edition):
Classification of Activities for the Preparation of Cash Flow Statement

Extract from the NCERT textbook

NCERT (2026-27 edition):
Ascertaining Cash Flow from Operating Activities – “… As stated earlier, while working out the cash flow from operating activities, the starting point is the ‘Net profit before tax and extraordinary items’ and not the ‘Net profit as per Statement of Profit and Loss’.”