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  • 20 Marks

CIBG – FRPA 2022 – L3 – Q2 – Adjebinge Ltd Cash Flow Statement

Prepare the statement of cash flows for Adjebinge Ltd for the year ended 31 March 2022 using the provided financial extracts.

ADJEBINGE LTD. (a) Adjebinge Ltd. is a wholesaler and retailer of office furniture. Extracts from the company’s financial statements are set out below:

Statement of comprehensive Income for the year ended:

31 March 2022 31 March 2021
GH¢ ‘000 GH¢ ‘000
Revenue:
— cash 12,800 26,500
— credit 53,000 28,500
65,800 55,000
Cost of sales (43,800) (33,000)
Gross profit 22,000 22,000
Operating expenses (11,200) (6,920)
Finance costs:
— loan notes (380) (180)
— overdraft (220) (180)
(600) (360)
Profit before tax 10,200 14,900
Income tax expense (3,200) (4,400)
Profit for the year 7,000 10,500
Other comprehensive income:
Gain on property revaluation 5,000 1,200
Total comprehensive income 12,000 11,700

Statement of changes in equity for the year ended 31 March 2022

Stated Capital Capital Surplus Income Surplus Total
GH¢ ‘000 GH¢ ‘000 GH¢ ‘000 GH¢ ‘000
Balances b/f 8,500 2,500 15,800 26,800
Share issue 12,900 12,900
Comprehensive income 5,000 7,000 12,000
Dividends paid (4,000) (4,000)
Balances c/f 21,400 7,500 18,800 47,700

Statements of financial position as at 31 March:

2022 2021
GH¢ ‘000 GH¢ ‘000
Asset
Non-current assets (see note)
Cost 93,500 80,000
Accumulated depreciation (43,000) (48,000)
50,500 32,000
Current assets
Inventories 5,200 4,400
Trade receivables 7,800 2,800
Bank 700
13,000 7,900
Total assets 63,500 39,900
Stated capital 21,400 8,500
Capital surplus 7,500 2,500
Income surplus 18,800 15,800
47,700 26,800
Non-current liabilities
10% loan notes 4,000 3,000
Current liabilities
Bank overdraft 3,600
Trade payables 4,200 4,500
Taxation 4,000 5,600
11,800 10,100
Total equity and liabilities 63,500 39,900

You are required to:
Prepare a statement of cash flows for Adjebinge Ltd. for the year ended 31 March 2022 in accordance with IAS 7: Statement of Cash Flows. (20 marks)

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  • 20 Marks

CR – Mar 2025 – L3 – Q1 – Consolidated Cash Flows

Prepare Pato Aluworks Group's consolidated cash flow statement for 2024, including reconciliation note, using indirect method.

Pato Aluworks Group (Pato) is an aluminium processing and casting entity that supplies high quality aluminum coils to both local and foreign markets. Pato has 3 subsidiaries namely Asanka, Jaritan and Topoya and one associate Dosi all of which it acquired several years ago. The Group’s Consolidated Statement of Profit or Loss Account for the year ended 31 December 2024 and Consolidated Statement of Financial Position as that date are set out below:

Consolidated Statement of Profit or Loss for the year ended 31 December (extract)

2024 2023
GH¢ GH¢
Profit from operations 651,150 640,496
Impairment reversal/(loss) 2,500 (1,250)
Finance costs (52,000) (40,825)
Share of profits of associate 127,575 108,439
Profit before tax 729,225 706,860
Income tax expense (145,800) (123,930)
Profit for the year (continuing operations) 583,425 582,930
Profit for the year (discontinued operations) 102,375
Profit for the year 685,800 582,930
Attributable to:
Owners of Pato 571,725 485,966
Non-controlling interest 114,075 96,964
685,800 582,930

Consolidated Statement of Financial Position as at 31 December

ASSETS 2024 2023
Non-current assets GH¢ GH¢
Property, plant and equipment 2,283,350 2,212,875
Intangible assets 22,000 –
Investment in associate 418,275 404,550
2,723,625 2,617,425
Current assets
Trade and other receivables 170,325 200,025
Cash and cash equivalents 46,125 32,625
216,450 232,650
Total assets 2,940,075 2,850,075
EQUITY AND LIABILITIES
Equity
Ordinary share capital (GH¢0.50 shares) 495,000 315,000
Share deals account 112,500 45,000
Retained earnings 1,491,750 1,518,975
Attributable to the equity holders of Pato 2,099,250 1,878,975
Non-controlling interest 315,450 339,300
2,414,700 2,218,275
Non-current liabilities
Lease Liabilities 239,100 300,000
Employee benefit obligations 42,150 37,500
Current liabilities
Trade and other payables 90,000 118,800
Due to related parties 1,125 –
Income tax payable 153,000 175,500
244,125 294,300
Total equity and liabilities 2,940,075 2,850,075

Additional information:
i) Pato owns 60% in Jaritan. The goodwill attributable to Pato arising on acquisition was GH¢67,500. The carrying value of Jaritan’s identifiable net assets (excluding goodwill arising on acquisition) in the group consolidation financial statements is GH¢180,000 at 31 December 2024. The recoverable amount of Jaritan is expected to be GH¢230,000 and no impairment loss had been recorded up to 31 December 2023.
ii) Pato sold all of its 75% shareholding in Asanka for cash during the year end December 31, 2024. As at December 31, 2023, all of the goodwill acquired in the business combination with Asanka had been written off. The profit from discontinued operations in the consolidated income statement above relates wholly to the sale of the shares in Asanka and can be analysed as follows:

GH¢
Profit before tax 93,150
Income tax expense (14,400)
Profit on disposal 23,625
102,375

The net assets of Asanka at the date of disposal were as follows:

GH¢
Property, plant and equipment 421,875
Trade and other receivables 31,275
Cash and cash equivalents 3,375
Trade and other payables (19,012)
437,512

iii) On 31 March 2024 Pato issued 100,000 ordinary shares for cash. This was followed by a bonus issue on 30 September 2024, utilising the share deals account. The consolidated statement of changes in equity for the year shows that all group companies paid ordinary dividends during the year.
iv) Depreciation of GH¢395,100 was recognised during the year ended 31 December 2024. In addition to the property, plant and equipment disposed of through the sale of Asanka, plant with a carrying amount of GH¢126,000 was sold for cash of GH¢135,000.
v) Trade and other payables include GH¢11,250 (2023: GH¢6,750) of unpaid interest due on the bank loan.

Required:
Prepare a consolidated statement of cash flows for Pato for the year ended 31 December 2024, including a note reconciling profit before tax to cash generated from operations, using the indirect method. (A note showing the effects of the disposal of Asanka is not required).

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  • 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.

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  • 30 Marks

FR – May 2017 – L2 – SA – Q1 – Statement of Cash Flows

Prepare a cash flow statement for Bello Professional Nigeria Limited using the indirect method, discuss the direct method, and explain classification options for interest and dividends in cash flow statements.

The following information relates to financial statements included in the annual report of Bello Professional Nigeria Limited.

Required

a. Prepare a statement of cash flow for Bello Professional Nigeria Limited for the year ended March 31, 2015, in accordance with IAS 7 using the indirect method. (18 Marks)

b. One of the directors at the annual general meeting suggested that the direct method of preparing cash flows is more useful. Comment on this view, providing your opinion. (7 Marks)

c. IAS 7 allows different classifications in cash flow statements. Explain the classification options for the following items:

  • i. Interest paid
  • ii. Dividends received
    (5 Marks)

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  • 30 Marks

FR – May 2024 – L2 – SB – Q1 – Statement of Cash Flows

Prepare a statement of cash flows for Badary Plc using the direct method and discuss profitability, gearing, and investor's stake in Badary Plc.

Additional Information:

(i) During the year ended March 31, 2021, plant and equipment with a carrying amount of N40,000,000 were sold for N55,000,000. The profit or loss on disposal was charged to distribution expenses.
(ii) Dividend of 2 kobo per share was paid in the year ended March 31, 2021, and there were also bonus issues.
(iii) Depreciation charged for the year was N10,000,000 on furniture and N30,000,000 on plant and equipment.
(iv) During the year, an investment that cost N12,500,000 some years ago was disposed of for N20,000,000. The profit or loss on disposal was charged to administrative expenses.
(v) Dividends received were from investments in shares and the immediate disposal of rights issues from the investment in a blue-chip company.

You are required to:
a. Prepare the statement of cash flows of Badary Plc for the year ended March 31, 2021, using the direct method in accordance with IAS 7. (20 Marks)
b. Discuss the profitability, gearing, and investor’s stake in Badary Plc and recommend strategies for improving or sustaining them. (10 Marks)

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  • 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.

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  • 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.

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  • 20 Marks

FR – May 2018 – L2 – Q3 – Statement of Cash Flows (IAS 7)

Prepare a statement of cash flows using the indirect method and reconcile cash equivalents with the statement of financial position.

The statement of financial position of Abagana Plc as at July 31, 2016, and 2017 is shown below

Statement of Financial Position as at July 31

Additional Information:

  1. Equipment costing N45,000 was sold in February 2017 for N15,000. The company depreciates equipment at 20% per annum on cost, with a full charge in the year of acquisition and none in the year of disposal.
  2. Non-current asset investments costing N38,000 were sold during the year for N31,500.
  3. Dividends received during the year amounted to N7,500. Dividends paid during the year totaled N150,000.
  4. The 14% loan notes were redeemed in January 2017, and 12% loan notes were issued in July 2017.
  5. The company issued N75,000 ordinary shares at a premium of 60 kobo per share in January 2017.
  6. The net cash flow from operating activities using the indirect method is a deficit of N187,000.

Required: a. Prepare a statement of cash flows for the year ended July 31, 2017, in accordance with IAS 7, using the indirect method. (12 Marks)

b. Reconcile the total cash and cash equivalents shown by the statement of cash flows to the equivalent figures shown in the opening and closing statements of financial position. (5 Marks)

c. Comment briefly on the significance of the information provided by the statement of cash flows. (3 Marks)

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  • 11 Marks

FA – Nov 2014 – L1 – SB – Q6b – Financial Statements (Preparation of Statement of Profit or Loss, Statement of Financial Position, Cash Flow Statement, and Statement of Changes in Equity)

Preparing the statement of cash flows (indirect method) showing cash generated from operating activities.

The financial data extracted from the books of Solomon Enterprises Limited for the year ended 31 December 2013 are as follows:

Particulars N’000
Sales 55,924
Cost of sales 41,028
Selling and distribution expenses 2,748
Administration expenses 2,404
Interest expenses 1,528
Tax paid 1,584
Increase in inventories 11,868
Decrease in receivables 1,416
Increase in payables 4,944

Additional information:
Included in administration expenses are:
i. Depreciation charges for the year of N500,000
ii. Loss on disposal of assets of N48,000

Required:
Prepare the Statement of Cash Flows showing cash flow generated from operating activities using the indirect method. (11 Marks)
Show all workings.

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  • 9 Marks

FA – Nov 2014 – L1 – SB – Q6a – Financial Statements (Preparation of Statement of Profit or Loss, Statement of Financial Position, Cash Flow Statement, and Statement of Changes in Equity)

Defining operating, investing, and financing cash flows with two examples for each.

a. In relation to the Statement of Cash Flows, define the following terms and give two examples in each case:

i. Operating Cash Flows
ii. Investing Cash Flows
iii. Financing Cash Flows
(Total 9 Marks)

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  • 1 Marks

FA – May 2016 – L1 – SA – Q20 – Regulatory Environment of Accounting

Identifying which activity is not an investing activity under IAS 7.

Which of the following will NOT be regarded as an investing activity in relation to IAS 7 statement of cash flows?
A. Dividend received
B. Cash paid to acquire property, plant and equipment
C. Cash paid to acquire equities in other entities
D. Cash payment to supplier of goods and services
E. Proceeds from sale of property, plant and equipment

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  • 20 Marks

FR – May 2017 – L2 – Q3 – Preparation of Financial Statements

Prepare a statement of cash flows for Haruna Ltd for the year ended 31 March 2017.

The following information has been taken from the financial statements of Haruna Ltd, a listed company for the year ended 31 March 2017:

Statement of Profit or Loss and Other Comprehensive Income (extracts) for the year ended 31 March 2017:


Additional information:

i) During the year, Haruna Ltd issued both ordinary shares and redeemable preference shares for cash.

ii) Investments classified as current assets are held for the short term and are readily convertible into the stated amounts of cash on demand.

iii) During the year, Haruna Ltd sold plant and equipment with a carrying amount of GH¢840,500 for GH¢900,000. Total depreciation charges for the year amounted to GH¢1,100,000. Plant costing GH¢50,000 was purchased on credit, and the amount is included within trade and other payables.

iv) Trade and other payables include accrued interest of GH¢5,000 as at 31 March 2017 (2016: GH¢10,000).

v) Intangibles relate to development costs capitalised in accordance with IAS 38 Intangible Assets. Costs amounting to GH¢70,000 were capitalised during the year.

Required:
Prepare a Statement of Cash Flows for Haruna Ltd for the year to 31 March 2017 in accordance with IAS 7 Statement of Cash Flows.

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  • 4 Marks

FR – Nov 2018 – L2 – Q3b – Financial Statement Analysis

Explanation of four benefits of cash flow information to users of financial statements.

An entity shall prepare a statement of cash flows in accordance with the requirements of IAS 7: Statement of Cash Flows and shall present it as an integral part of its financial statements for each period for which financial statements are presented.

Required:
Explain FOUR (4) benefits of cash flow information to users of financial statements.
(4 marks)

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  • 16 Marks

FR – Nov 2018 – L2 – Q3a – Preparation of Financial Statements

Preparation of the statement of cash flows using the indirect method based on the financial statements of Conso Bank Ghana Ltd.

The following financial statements relate to Conso Bank Ghana Limited for the year ended 31 December 2017:

Statement of Comprehensive Income for the year ended 31 December 2017

Description Note GH¢’000
Interest income (iii) 364,524
Interest expense (iv) (107,571)
Net interest income 256,953
Fees and commission income 132,374
Fees and commission expense (24,183)
Net fees and commission income 108,191
Other income (v) 9,727
Operating income 374,871
Impairment charge on loans and advances (93,492)
Operating expenses (vi) (169,317)
Profit before tax 112,062
Income tax expense (33,617)
Profit for the year 78,445

Statement of Financial Position as at 31 December 2017

Description Note 2017 (GH¢’000) 2016 (GH¢’000)
Assets
Cash and cash equivalents 577,767 752,303
Government securities 2,037,292 1,857,337
Advances to banks 214,875 107,407
Loans and advances to customers 1,190,782 1,145,133
Property and equipment (vii) 139,889 123,936
Intangible assets (viii) 18,131 12,162
Income tax asset 6,626 5,778
Total assets 4,185,362 4,004,056
Liabilities
Deposits from customers 3,368,406 3,078,071
Other liabilities and provisions 171,718 359,192
Total liabilities 3,540,124 3,437,263
Equity
Stated capital 100,000 100,000
Retained earnings 545,238 466,793
Total equity 645,238 566,793
Total liabilities and equity 4,185,362 4,004,056

Required:
Using the indirect method, prepare a statement of cash flows for the year ended 31 December 2017, in accordance with IAS 7: Statement of Cash Flows.
(16 marks)

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  • 20 Marks

FR – Nov 2015 – L2 – Q3 – Preparation of Financial Statements, Financial Statement Analysis

This question requires preparing a cash flow statement for CL Ltd using IAS 7 and calculating the gross profit margin based on changes in purchase and selling prices.

(a) CL Ltd is a wholesaler and retailer of office furniture. Extracts from the company’s financial statements are set out below:

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED:

STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2015:

Description Stated Capital Capital Surplus Income Surplus Total
Balances b/f 8,500 2,500 15,800 26,800
Share issue 12,900 – – 12,900
Comprehensive income – 5,000 7,000 12,000
Dividends paid – – (4,000) (4,000)
Balances c/f 21,400 7,500 18,800 47,700

STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH:

Note:
Non-current assets
During the year, the company redesigned its display areas in all of its outlets. The previous displays had cost GHS10 million and had been written down by GHS9 million. There was an unexpected cost of GHS500,000 for the removal and disposal of the old display areas. Also, during the year, the company revalued the carrying amount of its property upwards by GHS5 million, and the accumulated depreciation on these properties of GHS2 million was reset to zero.
All depreciation is charged to operating expenses.

Required:
Prepare a statement of cash flows for CL Ltd for the year ended 31 March 2015 in accordance with IAS 7 – Statement of Cash Flows. (15 marks)

(b) The directors of CL Ltd are concerned at the deterioration in its bank balance and are surprised that the amount of gross profit has not increased for the year ended 31 March 2015. At the beginning of the current accounting period (i.e. on 1 April 2014), the company changed to importing its purchases from a foreign supplier because the trade prices quoted by the new supplier were consistently 10% below those of its previous supplier. However, the new supplier offered a shorter period of credit than the previous supplier (all purchases are on credit). In order to encourage higher sales, CL Ltd increased its credit period to its customers, and some of the cost savings (on trade purchases) were passed on to customers by reducing selling prices on both cash and credit sales by 5% across all products.

Required:
(i) Calculate the gross profit margin that you would have expected CL Ltd to achieve for the year ended 31 March 2015 based on the selling and purchase price changes described by the directors. (2 marks)

(ii) Comment on the directors’ surprise at the unchanged gross profit and suggest what other factors may have affected gross profit for the year ended 31 March 2015.

(3 marks)
(Total: 20 marks)

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