SOLUTION Decrease in Trade Receivables or bills receivables indicate that collection from Trade Receivables or bills receivables are more than the amount of credit sales during the year. Hence, the…
SOLUTION Decrease in Trade Payables/bills payable is deducted and Increase in Trade Payables/bills payable is added while calculating Cash flow from operating activities.
SOLUTION Decrease in prepaid expenses will be added to operating profit while calculating cash flow from operating activities.
SOLUTION When preliminary expenses are written off, they are debited to profit &. Loss account. But the writing off of preliminary expenses does not involve cash payment. Hence, they are…
SOLUTION Depreciation reduces the net profit without reducing the cash balance as it is a non cash item. Hence, it is added back to net profit in order to find…
SOLUTION Depreciation is added back to net profit while calculating cash flows from operating activities.
SOLUTION Loss on sale of fixed assets is added back and profit on sale of fixed assets is deducted from net profit while arriving at the cash flow from operating…