An increase in prepayments is added to the operating profit when calculating the cash inflow or outflow from operating activities.

Name: An increase in prepayments is added to the operating profit when calculating the cash inflow or outflow from operating activities.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

An increase in prepayments is deducted from the operating profit when calculating cash flow from operating activities, as it represents cash paid out that has not yet been expensed.

An Increase in Prepayments Is Added to the Operating Profit