Practice - Indirect Method (commonly used)
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Practice Questions
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What does the Indirect Method start with?
💡 Hint: Think about the profit reported in the Profit and Loss statement.
What type of expenses do we add back in the Indirect Method?
💡 Hint: These are expenses that do not involve actual cash flow.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What is the first step in the Indirect Method?
💡 Hint: Recall the foundational step of the Indirect Method.
True or False: The Indirect Method primarily focuses on cash transactions.
💡 Hint: Consider how net profit includes non-cash items.
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Challenge Problems
Push your limits with advanced challenges
Calculate the cash flow from operations if Net Profit is ₹2,50,000, depreciation is ₹40,000, a decrease in inventory is ₹20,000, an increase in creditors is ₹15,000, and tax paid is ₹35,000.
💡 Hint: Follow the Indirect Method step by step, ensuring each adjustment is considered.
Discuss how changes in working capital affect cash flow and provide a scenario with calculations.
💡 Hint: Think of working capital as cash in-hand for daily operations.
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