Comprehension Passage
Charles Ltd., made a profit of Rs. 1,00,000 after charging depreciation of Rs. 20,000 on assets and a transfer to general reserve of Rs. 30,000. The goodwill amortised was Rs. 7,000 and gain on sale of machinery was Rs. 3,000.
Other information available to you (changes in the value of current assets and current liabilities) are:
- Trade receivables showed an increase of Rs. 3,000,
- Trade payables an increase of Rs. 6,000,
- Prepaid expenses an increase of Rs. 200,
- Outstanding expenses a decrease of Rs. 2,000.
Ascertain cash flow from operating activities.
Additional Information:
| Particulars | March 31, 2017 (Rs.) | March 31, 2016 (Rs.) |
|---|---|---|
| Trade Receivables | 20,00,000 | 40,00,000 |
| Trade Payables | 20,00,000 | 10,00,000 |
| Other Expenses payable (administrative) | 10,000 | 20,000 |
| Prepaid Administrative Expenses | 10,000 | 10,000 |
| Outstanding Trading Expenses | 20,000 | 40,000 |
| Advance Trading Expenses | 20,000 | 40,000 |
| Provision for Taxation | 10,00,000 | 12,00,000 |
If the trade receivables increased by Rs. 3,000 from March 31, 2016, to March 31, 2017, what will be the impact on the cash flow from operating activities?
1
Increase in trade receivables will increase the cash flow
2
Increase in trade receivables will decrease the cash flow
3
Increase in trade receivables has no effect on cash flow
4
Increase in trade receivables will have an equal impact on cash flow as trade payables