Practice Indirect Method (commonly Used) (5.1) - Cash Flow - ICSE 12 Accounts

Practice: Indirect Method (commonly used)

Lesson 5.1Cash Flow

Practise this section

10 questions

Flashcard drill
3 cards from this section. Quick, good the night before a test.
Exercise
6 questions · about 4 min · pass mark 70%. Hints available.
Sign up to start the exercise
Quiz
4 questions · about 3 min · pass mark 70%. Hints available.
Sign up to start the quiz

6 sample questions

Question 1.
What does the Indirect Method start with?
Show hintHide hint
Think about the profit reported in the Profit and Loss statement.
Question 2.
What type of expenses do we add back in the Indirect Method?
Show hintHide hint
These are expenses that do not involve actual cash flow.
3Question 3.
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
Show hintHide hint
Recall the foundational step of the Indirect Method.
4Question 4.
True or False: The Indirect Method primarily focuses on cash transactions.
- True
- False
Show hintHide hint
Consider how net profit includes non-cash items.
Question 5.
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.
Show hintHide hint
Follow the Indirect Method step by step, ensuring each adjustment is considered.
Question 6.
Discuss how changes in working capital affect cash flow and provide a scenario with calculations.
Show hintHide hint
Think of working capital as cash in-hand for daily operations.

6 more questions in this section. Enroll free to practise them all.