If the net profit earned during the year is Rs.50,000 and amount of Depreciation during the year is Rs.15,000, then the cash flow from operating activities will be equal to Rs. _______.
If the net profit earned during the year is Rs.50,000 and amount of Depreciation during the year is Rs.15,000, then the cash flow from operating activities will be equal to Rs. _______.
Solution
✅ Correct Option: 1
Depreciation is a non-cash expense which is added back to net profit while computing cash flow from operating activities (indirect method). Cash flow from operating activities = Net Profit + Depreciation = 50,000 + 15,000 = Rs.65,000.
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2022: 8 Aug Shift 2