Which of the following will be added to operating profit before working capital changes, while preparing Cash Flow statement using the indirect method?
- AIncrease in Trade Receivable by
- BDecrease in Inventory by
- CIncrease in Prepaid Expenses by
- DDecrease 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