Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Cash Flow Statement

Question:

Which of the following will increase the cash flow from operations?

Options:

Increase in Creditors

Decrease in Debtors

Decrease in Prepaid Expenses

All of the above

Correct Answer:

All of the above

Explanation:

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.