Cash Flow Statement · Class 12 · CBSE · Commerce Accountancy
Which of the following items is added back to Net Profit Before Tax and Extraordinary Items while calculating Cash Flow from Operating Activities?
Practice question from Cash Flow Statement (Class 12 · CBSE · Commerce Accountancy), with the correct answer and a step-by-step solution.
medium · MCQ · Q-4B2E06
Which of the following items is added back to Net Profit Before Tax and Extraordinary Items while calculating Cash Flow from Operating Activities?
- A.Gain on sale of machinery
- B.Interest income received on investments
- C.Depreciation on fixed assetsCorrect answer
- D.Dividend received
Solution
Depreciation is a non-cash expense that was previously deducted to arrive at the net profit. Since it does not involve any outflow of cash, it is added back to the net profit when calculating operating cash flows.
More from Cash Flow Statement
- Which of the following transactions is classified as an Operating Activity for a manufacturing company?
- While preparing a Cash Flow Statement as per AS-3 (Revised), how is a cash dividend paid by a non-financial company treated?
- An enterprise purchases machinery worth Rs 5,00,000 by issuing equity shares of the same amount. How will this transaction be recorded in t…
- In the context of Cash Flow Statements, how should a bank overdraft be treated?
Practise more Accountancy
Sign up free for adaptive practice on this chapter, with instant feedback and hints on every question.
Start practising freeFree to start · No credit card needed