New SIDBI Grade A New Batch Starts on Nov 18

    Register

    Question

    If the Opening Debtors were Rs.50,000 and Closing debtors are Rs.40,000, what effect will it have on the cash flow statement?

    A Cash flow from operating activities will be increased by Rs.10,000 Correct Answer Incorrect Answer
    B Cash flow from operating activities will be decreased by Rs.10,000 Correct Answer Incorrect Answer
    C Cash flow from operating activities will be increased by Rs.50,000 Correct Answer Incorrect Answer
    D Cash flow from operating activities will be decreased by Rs.50,000 Correct Answer Incorrect Answer
    E None of these Correct Answer Incorrect Answer

    Solution

    Change in debtors is a working capital change which will reflect under operating cash flow. Here, the change in the debtors decrease in debtors by Rs.10,000 (opening Rs.50,000 less closing Rs.40,000). A decrease in current assets (here debtors) indicated the decreased cash blockage or recovery of cash from debtors. This will be taken as an implicit inflow under Working Capital changes.

    Practice Next