Question

For calculating ‘cash flow from operating activities’ from the given figure of ‘Net profit’ earned during a year, how would you deal with;

1. Increase in debtors
2. Decrease in stock
3. Decrease in bills payable
4. Increase in creditors

Answer 1

Item	Treatment in Operating Activities
(a) Increase in debtors	Deduct from net profit
(b) Decrease in stock	Add to net profit
(c) Decrease in bills payable	Deduct from net profit
(d) Increase in creditors	Add to net profit