Question: An extract from a cash flow statement prepared by a trainee accountant is shown below: Which of the following criticisms of this extract are correct

An extract from a cash flow statement prepared by a trainee accountant is shown below: Cash Flow from Operating Activities Net Profit before taxation Adjustment for Depreciation

Which of the following criticisms of this extract are correct ?
1. Depreciation charges should have been added, not deducted.
2. Decrease in inventories should have been deducted, not added.
3. Increase in receivables should have been added, not deducted.
4. Increase in payables should have been added, not deducted.
A. 2 and 4
B. 2 and 3
C. 1 and 4

Cash Flow from Operating Activities Net Profit before taxation Adjustment for Depreciation Cash generated from operations before working capital changes Decrease in inventories Increase in receivable Increase in payables . Cash generated from Operations .. 28,00,000 (9,00,000) 19,00,000 3,00,000 (4,00,000) (8,00,000) 10,00,000

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