Advanced AccountingQuestion 5335 of 305
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11. The amount of Cash Flow from operating activity is:

Options

A` 28,000
B` 25,000
C` 15,000
D` 22,000
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Correct Answer

Option B` 25,000

All Options:

  • A` 28,000
  • B` 25,000
  • C` 15,000
  • D` 22,000

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Detailed Solution & Explanation

To compute Net Cash Flow from Operating Activities under AS 3:
1. Interest received on supplier advances = 3,000\displaystyle `\,3,000 (Operating inflow).
2. Recovery from debtor = 40% of 40,000=16,000\displaystyle 40\% \text{ of } `\,40,000 = `\,16,000 (Operating inflow).
3. Settlement of taxation liability = (14,000)\displaystyle `\,(14,000) (Operating outflow).
Net Cash from Operating Activities=3,000+16,00014,000=5,000\text{Net Cash from Operating Activities} = `\,3,000 + `\,16,000 - `\,14,000 = `\,5,000
Hence, **Option B** is the correct answer.

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