JC Ltd. earned a net profit of ₹ 50,000 after providing depreciation of ₹ 20,000 on fixed assets and a transfer of ₹ 15,000 to general reserve. The…

Cash Flow from Operating Activities Particulars Amount Amount (₹) (₹) Net Profit Before Tax (Working Note $\displaystyle 1$) $\displaystyle 65,000$ Add: Depreciation $\displaystyle 20,000$ Operating Profit before Working Capital changes $\displaystyle 85,000$ Add: Increase in Current Liabilities and Decrease in Current Assets Increase in Trade Payables $\displaystyle 10,000$ Increase in Expense Payable $\displaystyle 2,500$ Decrease in Prepaid Expenses $\displaystyle 5,000$ $\displaystyle 17,500$ Less: Decrease in Current Liabilities and Increase in Current Assets Increase in Trade Receivable $\displaystyle (5,000)$ Increase in Inventories $\displaystyle (15,000)$ Increase in Accrued Income $\displaystyle (5,000)$ Decrease in Income Received in Advance $\displaystyle (5,000)$ $\displaystyle (30,000)$ Cash inflows from operating activities $\displaystyle 72,500$ Calculation of Cash Flow from Operating Activities: Working Note $\displaystyle 1$: Calculation of Net Profit Before Tax Net Profit + General Reserve = $\displaystyle 50,000$ +$\displaystyle 15,000$ = ₹$\displaystyle 65,000$