Question

__________________ are the items which are added to net profit while calculating funds from operation.

• A. Loss on sale of fixed assets
• B. Transfer to general reserve
• C. Good will written off
• D. All of these

Answer 1

The correct option is D All of these

Fund from operation need to be identified by adding and deducting the extra ordinary items to the net profit. As these items does not pertains to the normal business operations, hence the adjustment to net profit is required.

Below are the extra ordinary (non operational) items which need to be added back to find out the funds from operations:

Net Profit as per profit & loss Account

Add:

Loss on sales of fixed assets

Transfer to general reserve

Goodwill written off.