Which of the following will increase the cash flow from operations?
Answer & explanation
Correct answer: option 4
The correct answer is option 4- All of the above.
If the balance of a current liability increases, or the balance of a current asset decreases, Cash flow from operations will increase. If the balance of a liability decreases and the balance of current assets increases, cash flow from operations will decrease.
- Increase in Creditors- Increase in liability so added
- Decrease in Debtors- Decrease in asset so added
- Decrease in Prepaid Expenses-- Decrease in asset so added
So, All of these will increase the cash flow from operations.