alleryStart learning →An increase in a non-cash current asset is, in the indirect method:
AShown under financing
BDeducted from net income
CIgnored in the statement
DAdded back to net income
Answer & Solution
Correct answer: B. Deducted from net income
A rise in an asset such as receivables means cash was tied up, so it is deducted from net income.
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Related questions
A non-financial entity received dividend Rs 12 and interest Rs 8, paid dividend 30 and intCash 20, demand deposit 60, 2-month T-bill 30, 9-month FD 40, integral overdraft 25. TotalAll sales Rs 900 are on credit; receivables rose from 80 to 110. Cash collected from custoCash share issue 200, debt converted 500, loan raised 100, repaid 60, dividend 40. Net finPlant with book value Rs 55 lakh sold for Rs 40 lakh cash. Investing inflow?Opening cash equivalents Rs 120; operating +300, investing -180, financing -50. Closing baPBT Rs 500 lakh after depreciation 80, finance cost 40, interest income 25. Operating profThe indirect method turns accrual net income into cash flow by: