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Question
If the net profits earned during the year is Rs. 50,000 and the amount of debtors in the beginning and the end of the year is Rs. 10,000 and Rs. 20,000 respectively, then the cash from operating activities will be equal to Rs. ______.
Options
Rs. 40,000
Rs. 60,000
MCQ
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Solution
If the net profits earned during the year is Rs. 50,000 and the amount of debtors in the beginning and the end of the year is Rs. 10,000 and Rs. 20,000 respectively, then the cash from operating activities will be equal to Rs. 40,000.
Explanation:
Increase in Debtors: Closing Debtors − Opening Debtors
= Rs. 20,000 − Rs. 10,000
= Rs. 10,000
Cash from Operating Activities = Net Profit − Increase in Debtors
= Rs. 50,000 − Rs. 10,000
= Rs. 40,000
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