CIMA BA3 · Chapter 12 · Question 1 of 10
When cash flows from operating activities are calculated using the indirect method, which of the following is added back to profit before tax?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Depreciation
Explanation
Depreciation is a non-cash expense, so it is added back. An increase in inventory and a decrease in payables use cash and are deducted, and a profit on disposal is deducted because the proceeds are shown under investing activities.
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