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Practice Questions
Test your understanding with targeted questions related to the topic.
Question 1
Easy
What does the Indirect Method start with?
💡 Hint: Think about the profit reported in the Profit and Loss statement.
Question 2
Easy
What type of expenses do we add back in the Indirect Method?
💡 Hint: These are expenses that do not involve actual cash flow.
Practice 4 more questions and get performance evaluation
Interactive Quizzes
Engage in quick quizzes to reinforce what you've learned and check your comprehension.
Question 1
What is the first step in the Indirect Method?
- A) Add Non-Cash Expenses
- B) Start with Net Profit before Tax
- C) Adjust for Working Capital
💡 Hint: Recall the foundational step of the Indirect Method.
Question 2
True or False: The Indirect Method primarily focuses on cash transactions.
- True
- False
💡 Hint: Consider how net profit includes non-cash items.
Solve 2 more questions and get performance evaluation
Challenge Problems
Push your limits with challenges.
Question 1
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.
Question 2
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.
Challenge and get performance evaluation