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Question : To Calculate Cash Flow from Operating Activities, which of the following will be deducted?

Option 1: Decrease in Inventories

Option 2: Increase in Trade Payables

Option 3: Decrease in Trade Payables

Option 4: Decrease in Trade Receivables


Team Careers360 21st Jan, 2024
Answer (1)
Team Careers360 24th Jan, 2024

Correct Answer: Decrease in Trade Payables


Solution : If the amount owed to vendors or suppliers has been reduced, this indicates that money has really been paid to them, leaving the business with less cash. Because of this, a rise in accounts payable signals a decline in cash flow.

Hence the Correct answer is option 3.

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