Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Cash Flow Statement

Question:

While calculating cash flow from operating activities which will be deducted?

Options:

Decrease in Prepaid Expenses

Increase in Trade Payables

Increase in Trade Receivables

Decrease in Trade Receivables

Correct Answer:

Increase in Trade Receivables

Explanation:

The increase in current assets and decrease in current liabilities are deducted from the operating profit, and the decrease in current assets and increase in current liabilities are added to the operating profit so as to arrive at the exact amount of net cash flow from operating activities. An increase in Trade Receivables is an increase in current assets.