Arrange the following in proper sequence while preparing Cash Flow Statement:

(A) Net cash flow from operating activities
(B) Cash flow from financing activities
(C) Cash flow from investing activities
(D) Calculate net profit before tax and extraordinary items in working note

Choose the correct answer from the options given below:

The correct option is (D), (A), (C), (B).

Preparing a Cash Flow Statement involves a systematic process of identifying, calculating, and presenting cash inflows and outflows from different activities of an enterprise. Here is the step-by-step sequential breakdown of how these components are arranged:

1. Step 1: Calculate net profit before tax and extraordinary items in working note (D)
Before preparing the main cash flow statement, the starting point for calculating operating cash flow is the net profit before tax and extraordinary items. This is determined in a working note by adjusting the net profit (from the Statement of Profit and Loss) for provisions, proposed dividend, transfer to reserves, and extraordinary items.

2. Step 2: Net cash flow from operating activities (A)
Using the net profit calculated in Step 1 as a base, adjustments are made for non-cash and non-operating expenses/incomes, and changes in working capital (inventories, trade receivables, trade payables, etc.) to arrive at the final Net Cash Flow from Operating Activities. This is the first major section presented in the statement.

3. Step 3: Cash flow from investing activities (C)
The next section of the Cash Flow Statement covers cash flows related to the acquisition and disposal of long-term assets and other investments not included in cash equivalents. This is compiled after the operating section.

4. Step 4: Cash flow from financing activities (B)
The final section reports cash flows that result in changes in the size and composition of the contributed equity and borrowings of the enterprise (such as proceeds from issuing shares or debt, repayment of loans, and payment of dividends/interest).

Therefore, the correct chronological and presentation sequence is (D) → (A) → (C) → (B).