Trade receivables for 31.3.2018 is Rs. 50,000 and for 31.3.2017 is Rs.62,000. What is the treatment in the cash flow statement for 31.3.2018 ?

Increase in Trade Receivable of 12000 to be added to Net Profit

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Decrease in Trade Receivable of 12000 to be added to Net Profit

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Decrease in Trade Receivable of 12000 to be reduced from Net Profit

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Increase in Trade Receivable of 12000 to be reduced from Net Profit

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Solution

The correct option is B
Decrease in Trade Receivable of 12000 to be added to Net Profit

We calculate change from previous year to current year.
The treatment in the cash flow statement for 31.3.2018:
Decrease in trade receivables = 62,000 - 50,000 = Rs. 12,000
& decrease in trade receivable is to be added to the net profit

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