- 15 Marks
FR – Nov 2021 – L2 – Q5 – Statement of Cash Flows (IAS 7)
Prepare a statement of cash flows using the indirect method and analyze current ratios and overdraft reasons for Dongo Limited.
Question
Dongo Limited statement of profit or loss for the year ended December 31, 2020:
| Item | N’000 |
|---|---|
| Revenue | 420,000 |
| Cost of goods sold | (99,000) |
| Gross profit | 321,000 |
| Administrative cost | (140,800) |
| Operating profit | 180,200 |
| Investment income | 8,100 |
| Interest paid | (17,120) |
| Profit before taxation | 171,180 |
| Income tax expense | (37,000) |
| Profit for the year | 134,180 |
Dongo Limited statement of financial position as at December 31,
Additional information:
(i) During the year ended December 31, 2020; other comprehensive income was nil.
(ii) A dividend of N85,870,000 was paid during the year ended December 31, 2020.
(iii) There was no disposal of non-current assets during the year.
You are required to:
a. Prepare the statement of cash flows using the indirect method under IAS 7. (10 Marks)
b. Calculate the company’s current ratio as at the year ended December 31, 2019 and 2020. (2 Marks)
c. State THREE technical reasons which accounted for the company’s rise in overdrafts for the TWO years.
Find Related Questions by Tags, levels, etc.
- Tags: Cash Flows, Current Ratio, Financial Statements, Overdraft Analysis
- Level: Level 2
- Topic: Statement of Cash Flows (IAS 7)
- Series: NOV 2021