Part of a company’s draft cash flow statement is shown below:
                                                                                      $000
          Operating profit                                                   8,640
          Depreciation charges                                          (2,160)
          Proceeds of sale of non-current assets               360
          Increase in inventory                                           (330)
          Increase in accounts payable                               440
The following criticisms of the above extract have been made:
(1) Depreciation charges should have been added, not deducted.
(2) Increase in inventory should have been added, not deducted.
(3) Increase in accounts payable should have been deducted, not added.
(4) Proceeds of sale of non-current assets should not appear in this part of the cash flow statement.
Which of these criticisms are valid?
A 2 and 3 only
B 1 and 4 only
C 1 and 3 only
D 2 and 4 only.

B