If the net profits earned during the year is Rs. 50,000 and the amount of debtors at the beginning and the end of the year is Rs. 10,000 and Rs. 20,000 respectively, then the cash from operating activities will be equal to:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Rs. 40,000
An increase in debtors means part of the year’s sales was not received in cash, so the increase is deducted from net profit to find cash from operating activities.
Increase in debtors = Rs. 20,000 − Rs. 10,000 = Rs. 10,000
Cash from operating activities = Rs. 50,000 − Rs. 10,000 = Rs. 40,000
NCERT (2026-27 edition):
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