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easyMCQCUET Accountancy 2023 29 May Shift 22026Accountancy
1 mark

Which of the following will be added to operating profit before working capital changes, while preparing Cash Flow statement using the indirect method?

  1. A
    Increase in Trade Receivable by
  2. B
    Decrease in Inventory by
  3. C
    Increase in Prepaid Expenses by
  4. D
    Decrease in Trade Payable by

Solution & Step-by-step Explanation

While adjusting for changes in working capital under Operating Activities using the indirect method:Add: Decrease in Current Assets and Increase in Current Liabilities.Less: Increase in Current Assets and Decrease in Current Liabilities.Let's evaluate the options:Increase in Trade Receivable (Current Asset) DeductedDecrease in Inventory (Current Asset) AddedIncrease in Prepaid Expenses (Current Asset) DeductedDecrease in Trade Payable (Current Liability) Deducted

Practice this question

Try it yourself before checking the explanation above.

Which of the following will be added to operating profit before working capital changes, while preparing Cash Flow statement using the indirect method?
A
Increase in Trade Receivable by
B
Decrease in Inventory by
C
Increase in Prepaid Expenses by
D
Decrease in Trade Payable by

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