Question Tag: Direct Method

Search 500 + past questions and counting.

  • Filter by Professional Bodies

  • Filter by Subject

  • Filter by Series

  • Filter by Topics

  • Filter by Levels

  • 9 Marks

FR – Nov 2022 – L2 – Q2 – Statement of Cash Flows

Prepare a statement of cash flows using the direct method for Obudu Nigeria Limited based on the given financial statements.

Financial statements and extract from the cashbook of Obudu Nigeria Limited for the year ended December 31, 2020 are summarised below:
Obudu Nigeria Limited Statement of profit or Loss for the year ended December 31, 2020

Obudu Nigeria Limited Statement of financial position as at December 31



Other Information
(i) The 8% loan notes have been partly redeemed. It is expected that the full redemption will be made in five years time.
(ii) A cash payment for insurance of N1million was omitted in the cash book and other records.
(iii) The investments are not easily realisable.
Required:
a. Prepare the statement of cash flows for the year ended December 31, 2020 using the direct method in accordance with IAS 7. (9 Marks)
b. Prepare a statement of reconciliation of the operating profit to cash flow from operations. (5 Marks)
c. Discuss the benefits of statement of cash flows information to users of financial statements.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FR – Nov 2022 – L2 – Q2 – Statement of Cash Flows"

  • 15 Marks

FR – Nov 2015 – L2 – Q6 – Statement of Cash Flows (IAS 7)

Prepare the statement of cash flows and comment on cash flow management for Global Plc.

Global Plc is an entity quoted on the Nigerian Stock Exchange. You are provided with the following set of summarized published financial statements of the company for the year ended September 30, 2014:

Statement of profit or loss and other comprehensive income for the year ended September 30, 2014

 

Item N’000
Revenue 500,000
Cost of sales (300,000)
Gross profit 200,000
Administrative expenses (29,000)
Finance cost (1,000)
Profit before taxation 170,000
Income tax expense (40,000)
Profit for the period 130,000

Statement of financial position as at September 30, 2014

Item 2014 (N’000) 2013 (N’000)
Non-current assets
Property, plant, and equipment 200,000 220,000
Goodwill – 10,000
Current assets
Inventories 100,000 80,000
Trade receivables 75,000 60,000
Bank balances 20,000 5,000
Total assets 395,000 375,000
Equity and Liabilities 2014 (N’000) 2013 (N’000)
Equity
Ordinary shares @ N1.25 each 10,000 8,000
Retained earnings 250,000 197,000
Total equity 260,000 205,000

The following information is relevant:

  • During the financial year, the company paid a dividend of N87,000,000 to equity holders, and this had been accounted for during the year. The current market price of the company’s shares is N10 per share.
  • The company is planning to take a long-term loan of N400,000,000 from a consortium of banks. The company’s financial statements and loan applications have already been submitted to the bank.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FR – Nov 2015 – L2 – Q6 – Statement of Cash Flows (IAS 7)"

  • 20 Marks

PSAF – Nov 2021 – L2 – Q1a – Introduction to Public Sector Accounting

Prepare a statement of cash flows using the direct method for Harmony State Government for the year ending December 31, 2020.

The following information was extracted from the records of the Accountant-General of Harmony State for the year ended December 31, 2020:

The following additional information was made available:
(i) Owing to the inability of the State to fulfill its obligation towards the
payment of the salaries of local government staff, a federal government
bailout of N301,024,000 was received after fulfilling all necessary
criteria set for accessing the fund.
(ii) During the year, the state government made claims for the repayment
of N65,483,000 relating to funds spent on the rehabilitation of federal
roads and was granted.
(iii) Details emerging from the Federation Accounts and Allocation
Committee (FAAC) showed the following:

(iv) Capital expenditure funded from aids and grants and external loan
amounted to N15,387,748,000
(v) During the year, the federal government made a transfer for the refund
on reconciliation of Paris Club account amounting to N41,310,000
(vi) Refund of bank charges to the Ministry of Finance in the state amounted
to N51,112,000.
(vii) Cash and cash equivalents as at January 1, 2020 and December 31, 2020
N1,546,699 and N301,657,000 respectively.
(viii) Other revenue sources of the state government during the year also
included an exchange difference amounting to N490,575,000.
(ix) Details of capital expenditure are categorised as follows:

Required:
a. Prepare statement of cash flows using direct method for the Harmony
State government for the year ended December 31, 2020.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "PSAF – Nov 2021 – L2 – Q1a – Introduction to Public Sector Accounting"

  • 2 Marks

FR – May 2019 – L2 – Q2c – Statement of Cash Flows (IAS 7)

Discuss the advantages of the direct method of preparing a statement of cash flows over the indirect method.

Discuss the advantages of the direct method of preparing a statement of cash flows over the indirect method.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FR – May 2019 – L2 – Q2c – Statement of Cash Flows (IAS 7)"

  • 16 Marks

FR – May 2019 – L2 – Q2a and Q2b – Presentation of Financial Statements (IAS 1)

Prepare the statement of cash flows for Babafrayo Nig. Ltd. using the indirect method and calculate the net cash flow from operating activities using the direct method.

Babafrayo Nig. Ltd. is a company located in Lagos and is engaged in the hotel and tourism business. The financial statements of the company are as follows:

Statement of Profit or Loss and Other Comprehensive Income for the Year Ended 31 December 2018:

Description ₦’000
Revenue 994,500
Cost of sales (884,000)
Gross profit 110,500
Admin expenses (21,250)
Distribution cost (44,200)
Finance costs (4,250)
Profit before taxation 40,800
Income tax expense (5,100)
Profit for the year 35,700
Other comprehensive income
Gains on property revaluation 17,000
Total comprehensive income 52,700

Statement of Financial Position as at 31 December 2018:

Description 2018 N’000 2017 N’000
Non-current assets:
Property, plant & equipment 242,250 174,250
Total non-current assets 242,250 174,250
Current assets:
Inventories 49,300 51,000
Trade receivables 35,700 25,500
Cash and cash equivalent 2,550 4,250
Total current assets 87,550 80,750
Total assets 329,800 255,000

Additional information:

(i) Property, plant, and equipment with a carrying value of ₦23,800,000 was sold during the year ended 31 December 2018 for ₦24,650,000. The asset had originally cost ₦38,250,000.
(ii) Depreciation on property, plant, and equipment for the year 2018 amounted to ₦34,000,000.
(iii) Dividend paid during the year 2018 amounted to ₦4,250,000 and is reported in the statement of changes in equity for the year.

(a) Prepare the statement of cash flows for the year ended 31 December 2018 in accordance with IAS 7 using the indirect method.
(12 Marks)

(b) Prepare net cash flows from operating activities only using the direct method.
(6 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FR – May 2019 – L2 – Q2a and Q2b – Presentation of Financial Statements (IAS 1)"

  • 5 Marks

FR – Nov 2018 – L2 – SA – Q1b – Statement of Cash Flows (IAS 7)

Compare the direct and indirect methods of preparing a statement of cash flows.

Compare the direct and indirect methods of preparing a statement of cash flows.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FR – Nov 2018 – L2 – SA – Q1b – Statement of Cash Flows (IAS 7)"

  • 9 Marks

FR – Nov 2022 – L2 – Q2 – Statement of Cash Flows

Prepare a statement of cash flows using the direct method for Obudu Nigeria Limited based on the given financial statements.

Financial statements and extract from the cashbook of Obudu Nigeria Limited for the year ended December 31, 2020 are summarised below:
Obudu Nigeria Limited Statement of profit or Loss for the year ended December 31, 2020

Obudu Nigeria Limited Statement of financial position as at December 31



Other Information
(i) The 8% loan notes have been partly redeemed. It is expected that the full redemption will be made in five years time.
(ii) A cash payment for insurance of N1million was omitted in the cash book and other records.
(iii) The investments are not easily realisable.
Required:
a. Prepare the statement of cash flows for the year ended December 31, 2020 using the direct method in accordance with IAS 7. (9 Marks)
b. Prepare a statement of reconciliation of the operating profit to cash flow from operations. (5 Marks)
c. Discuss the benefits of statement of cash flows information to users of financial statements.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FR – Nov 2022 – L2 – Q2 – Statement of Cash Flows"

  • 15 Marks

FR – Nov 2015 – L2 – Q6 – Statement of Cash Flows (IAS 7)

Prepare the statement of cash flows and comment on cash flow management for Global Plc.

Global Plc is an entity quoted on the Nigerian Stock Exchange. You are provided with the following set of summarized published financial statements of the company for the year ended September 30, 2014:

Statement of profit or loss and other comprehensive income for the year ended September 30, 2014

 

Item N’000
Revenue 500,000
Cost of sales (300,000)
Gross profit 200,000
Administrative expenses (29,000)
Finance cost (1,000)
Profit before taxation 170,000
Income tax expense (40,000)
Profit for the period 130,000

Statement of financial position as at September 30, 2014

Item 2014 (N’000) 2013 (N’000)
Non-current assets
Property, plant, and equipment 200,000 220,000
Goodwill – 10,000
Current assets
Inventories 100,000 80,000
Trade receivables 75,000 60,000
Bank balances 20,000 5,000
Total assets 395,000 375,000
Equity and Liabilities 2014 (N’000) 2013 (N’000)
Equity
Ordinary shares @ N1.25 each 10,000 8,000
Retained earnings 250,000 197,000
Total equity 260,000 205,000

The following information is relevant:

  • During the financial year, the company paid a dividend of N87,000,000 to equity holders, and this had been accounted for during the year. The current market price of the company’s shares is N10 per share.
  • The company is planning to take a long-term loan of N400,000,000 from a consortium of banks. The company’s financial statements and loan applications have already been submitted to the bank.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FR – Nov 2015 – L2 – Q6 – Statement of Cash Flows (IAS 7)"

  • 20 Marks

PSAF – Nov 2021 – L2 – Q1a – Introduction to Public Sector Accounting

Prepare a statement of cash flows using the direct method for Harmony State Government for the year ending December 31, 2020.

The following information was extracted from the records of the Accountant-General of Harmony State for the year ended December 31, 2020:

The following additional information was made available:
(i) Owing to the inability of the State to fulfill its obligation towards the
payment of the salaries of local government staff, a federal government
bailout of N301,024,000 was received after fulfilling all necessary
criteria set for accessing the fund.
(ii) During the year, the state government made claims for the repayment
of N65,483,000 relating to funds spent on the rehabilitation of federal
roads and was granted.
(iii) Details emerging from the Federation Accounts and Allocation
Committee (FAAC) showed the following:

(iv) Capital expenditure funded from aids and grants and external loan
amounted to N15,387,748,000
(v) During the year, the federal government made a transfer for the refund
on reconciliation of Paris Club account amounting to N41,310,000
(vi) Refund of bank charges to the Ministry of Finance in the state amounted
to N51,112,000.
(vii) Cash and cash equivalents as at January 1, 2020 and December 31, 2020
N1,546,699 and N301,657,000 respectively.
(viii) Other revenue sources of the state government during the year also
included an exchange difference amounting to N490,575,000.
(ix) Details of capital expenditure are categorised as follows:

Required:
a. Prepare statement of cash flows using direct method for the Harmony
State government for the year ended December 31, 2020.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "PSAF – Nov 2021 – L2 – Q1a – Introduction to Public Sector Accounting"

  • 2 Marks

FR – May 2019 – L2 – Q2c – Statement of Cash Flows (IAS 7)

Discuss the advantages of the direct method of preparing a statement of cash flows over the indirect method.

Discuss the advantages of the direct method of preparing a statement of cash flows over the indirect method.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FR – May 2019 – L2 – Q2c – Statement of Cash Flows (IAS 7)"

  • 16 Marks

FR – May 2019 – L2 – Q2a and Q2b – Presentation of Financial Statements (IAS 1)

Prepare the statement of cash flows for Babafrayo Nig. Ltd. using the indirect method and calculate the net cash flow from operating activities using the direct method.

Babafrayo Nig. Ltd. is a company located in Lagos and is engaged in the hotel and tourism business. The financial statements of the company are as follows:

Statement of Profit or Loss and Other Comprehensive Income for the Year Ended 31 December 2018:

Description ₦’000
Revenue 994,500
Cost of sales (884,000)
Gross profit 110,500
Admin expenses (21,250)
Distribution cost (44,200)
Finance costs (4,250)
Profit before taxation 40,800
Income tax expense (5,100)
Profit for the year 35,700
Other comprehensive income
Gains on property revaluation 17,000
Total comprehensive income 52,700

Statement of Financial Position as at 31 December 2018:

Description 2018 N’000 2017 N’000
Non-current assets:
Property, plant & equipment 242,250 174,250
Total non-current assets 242,250 174,250
Current assets:
Inventories 49,300 51,000
Trade receivables 35,700 25,500
Cash and cash equivalent 2,550 4,250
Total current assets 87,550 80,750
Total assets 329,800 255,000

Additional information:

(i) Property, plant, and equipment with a carrying value of ₦23,800,000 was sold during the year ended 31 December 2018 for ₦24,650,000. The asset had originally cost ₦38,250,000.
(ii) Depreciation on property, plant, and equipment for the year 2018 amounted to ₦34,000,000.
(iii) Dividend paid during the year 2018 amounted to ₦4,250,000 and is reported in the statement of changes in equity for the year.

(a) Prepare the statement of cash flows for the year ended 31 December 2018 in accordance with IAS 7 using the indirect method.
(12 Marks)

(b) Prepare net cash flows from operating activities only using the direct method.
(6 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FR – May 2019 – L2 – Q2a and Q2b – Presentation of Financial Statements (IAS 1)"

  • 5 Marks

FR – Nov 2018 – L2 – SA – Q1b – Statement of Cash Flows (IAS 7)

Compare the direct and indirect methods of preparing a statement of cash flows.

Compare the direct and indirect methods of preparing a statement of cash flows.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FR – Nov 2018 – L2 – SA – Q1b – Statement of Cash Flows (IAS 7)"

Elevate your professional expertise across key business domains with our comprehensive training programs

Our offerings

Contact Info

  • +233203701923
    +233543919232
  • info@knowsia.com

Customer

Get In Touch

Follow us on our social media and get daily updates.

Facebook-f Twitter Linkedin-in Envelope
Oops!

This feature is only available in selected plans.

Click here to view all plans

Click on the login button below to login if you’re already subscribed to a plan or click on the upgrade button below to upgrade your current plan.

Login
Upgrade Plan

If you’re not subscribed to a plan, click on the button below to choose a plan

Subscribe to a plan