Question

If net profits are Rs. 30,000 and expenses not resulting in the application of fund are Rs. 10,000, then the funds from operation will be ___________.

• A. Rs. 30,000
• B. Rs. 40,000
• C. Rs. 10,000
• D. Rs. 20,000

Answer 1

Answer: (B)

Rs. 40,000

Funds from operation means the cash inflows generated from the business. That means, all non fund expenses need to added back to the net profit to find out the funds from operations.

Hence,

Net Profit + Non fund expenses = Funds from operations

Rs.30000 + Rs.10000 = Rs.40000/-