Part of the process of preparing a company’s cash flow statement is the calculation of cash inflow from operating activities. Which of the following statements about that calculation using indirect method are correct ?
1. Loss on sale of operating fixed assets should be deducted from net profit before taxation.
2. Increase in inventory should be deducted from operating profits.
3. Increase in payables should be added to operating profits.
4. Depreciation charges should be added to net profit before taxation.
A. 1, 2 and 3
B. 1, 2 and 4
C. 2, 3 and 4