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I have to qualify my answer.
Using the indirect method, if asset increased (except PPE and investment assets), the amount of increase is deducted from the net income to get cash flow from operating activities.
Using direct, we need to check first why these assets have increased, does it involved cash transaction, credit transaction or revaluation of assets. And what assets have increased for us to classify them accordingly (Operating, Investing, Financing)
If cash transaction involve for purchase the assets than otion A is the right answer but if there is increase without cash involvement than option C is right.
(1) is the Correct Ans.
Subtract from Cash flow statements. Its an outflow of Cash.
for the first sight an accountant would say "subtract" however what if the increase is being promoted through the projects under constructions that`s been created during past years.
Current assets, non current assets and liabilities. Like cash, bank covenants etc are added.
the increase in assets is a subtract in the cash flow because it is outflow in cash.
subtract in cash flow statement
if the increase is due to cash transaction so, it should be subtract. No1
Increase in Assets means there was cash outflow to acquire the assets during the year, So cash out flow will be deducted or subtract in cash flow statement under the head of Investment activities.
