Arrange the following Cash Flows from Operating Activities in sequence as per indirect method-(A) Income Tax Paid(B) Net Profit/Loss before Tax and Extraordinary Items(C) Operating Profit before Working Capital changes(D) Effects of Extraordinary Items relating to operating activity.Choose the correct answer from the options given below:
- A\text{(B), (C), (D),(A)}
- B\text{(B), (C), (A), (D)}
- C\text{(B), (A), (D), (C)}
- D\text{(C), (B), (D), (A)}
Solution & Step-by-step Explanation
Under the Indirect Method for calculating cash flow from operating activities (per AS-3), the computation flows in this specific sequence:(B) Start with Net Profit/Loss before Tax and Extraordinary Items.Add back non-cash and non-operating adjustments to arrive at (C) Operating Profit before Working Capital changes.Adjust for working capital changes, and then deduct (A) Income Tax Paid.Finally, adjust for the (D) Effects of Extraordinary Items to determine the final net operating cash flow.Thus, the proper presentation order is (B), (C), (A), (D).