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Question
Increase in debtors in the cash flow statement is __________.
Increase in debtors in the cash flow statement is __________.
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Solution
The correct option is B - deducted
When current asset decreases, there is an inflow of cash. For example: when debtors are decreased it means they have paid the dues and therefore you get money. Similarly, when debtors, i.e. accounts receivable increases it means there is no inflow of cash and increase in debtors is as good as cash outflow. Hence, you deduct it.
The correct option is B - deducted
When current asset decreases, there is an inflow of cash. For example: when debtors are decreased it means they have paid the dues and therefore you get money. Similarly, when debtors, i.e. accounts receivable increases it means there is no inflow of cash and increase in debtors is as good as cash outflow. Hence, you deduct it.
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