(A) Operating profit before working capital changes (B) Cash generated from operations (C) Income tax paid (D) Net cash flow from operating activities (E) Goodwill amortised Identify the correct sequence of the following steps involved in calculating cash flows from operating activities of a company: Option 1: (E), (C), (D), (A), (B) Option 2: (E), (A), (D), (B), (C) Option 3: (E), (A), (B), (C), (D) Option 4: (A), (B), (C), (D), (E)

Answer: (E), (A), (B), (C), (D). Solution: To calculate cash flows from operating activities, we follow these steps: 1. Start with Goodwill amortised (E) - this is a non-cash expense that needs to be added back. 2. Next, calculate Operating profit before working capital changes (A) - this shows profit before considering changes in working capital. 3. Then, we find Cash generated from operations (B) - this is the cash available from operating activities. 4. After that, we account for Income tax paid (C) - this is the cash outflow for taxes. 5. Finally, we arrive at Net cash flow from operating activities (D) - this is the total cash flow from operations after all adjustments. So, the correct sequence is: (E) → (A) → (B) → (C) → (D). This is why option 3 is correct.

Financial Statements

Cash Flow

Easy

(A) Operating profit before working capital changes
(B) Cash generated from operations
(C) Income tax paid
(D) Net cash flow from operating activities
(E) Goodwill amortised

Identify the correct sequence of the following steps involved in calculating cash flows from operating activities of a company:

(E), (C), (D), (A), (B)

(E), (A), (D), (B), (C)

(E), (A), (B), (C), (D)

(A), (B), (C), (D), (E)

✅ Correct Option: 3

To calculate cash flows from operating activities, we follow these steps:

Start with Goodwill amortised (E) - this is a non-cash expense that needs to be added back.
Next, calculate Operating profit before working capital changes (A) - this shows profit before considering changes in working capital.
Then, we find Cash generated from operations (B) - this is the cash available from operating activities.
After that, we account for Income tax paid (C) - this is the cash outflow for taxes.
Finally, we arrive at Net cash flow from operating activities (D) - this is the total cash flow from operations after all adjustments.

So, the correct sequence is: (E) → (A) → (B) → (C) → (D).

This is why option 3 is correct.

2022: 8 Aug Shift 2

Which one of the following activities relate to financing activities?

2022: 15 July Shift 2

Cash Advance and Loan made to third party (other than made by financial enterprise) is

2023: 11 June Shift 3

Calculate cash flow from financing Activities of X Ltd. which is a financing company.

Issue of shares Rs. 1,00,000

Issue of Bonus shares Rs. 50,000

Dividend paid Rs. 10,000

Interest paid Rs. 5,000

2026: 6 June Shift 1

Match List-I with List-II

List-I	List-II
(A) Acquisition of Machinery by Issue of Equity Shares	(I) Investing Activities
(B) Purchase of Machinery for cash	(II) Non-cash Item
(C) Amortisation of Goodwill	(III) Financing Activities
(D) Repayment of Bank Loan	(IV) Operating Activities

Choose the correct answer from the options given below:

2022: 8 Aug Shift 2

Which items are not added to the net profit for calculating cash from operating activities?

(I) Interest and dividend received

(II) Transfer to reserves

(III) Discount on issue of shares

(IV) Loss on sale of fixed assets

2022: 20 July Shift 1

Calculate the amount of cash generated from operations from the following information :

Particulars	(Rs.)
Profit before change in working capital	2,00,000
Depreciation on plant and Machinery	20,000
Gain on sale of Building	10,000
Increase in trade Paybles	4,500
Increase in trade Receivables	3,500
Interest paid	2,225
Decrease in Inventories	3,750
Redemption of 10% Debentures	80,000

Identify the correct sequence of the following steps involved in calculating cash flows from operating activities of a company:

Solution

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