alleryStart learning →In the indirect method, a decrease in current liabilities is
AAdded to net income
BLeft out entirely
CShown as financing
DDeducted from net income
Answer & Solution
Correct answer: D. Deducted from net income
A fall in current liabilities means more cash was paid out than expensed, so it is deducted from profit.
Keep practising AS 3 Cash Flow Statement
Browse all AS 3 Cash Flow Statement questions for CA Inter, or explore more Accounting topics.
Related questions
A machine with book value Rs 70,000 is sold at a loss of Rs 15,000. The investing inflow iNet plant rose from Rs 5,00,000 to Rs 5,40,000 after Rs 60,000 depreciation, no sales. CasOperating +4,00,000, investing -3,00,000, financing +50,000, opening 1,20,000. Closing casCash 20,000, bank 1,00,000, 2-month bills 50,000, shares 80,000. Cash and equivalents?Cash flow statements are most commonly prepared using theA company buys back its own shares for cash. This is aThe cash flow statement reveals the quality of a company'sFinancial flexibility in cash flow analysis means the ability to