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  • 15 Marks

FR – L2 – Q74 – Statement of Cash Flows

List four advantages of cash flow accounting as per IAS 7.

IAS 7 Statement of Cash Flows states that additional information may be relevant to users in understanding the financial position and liquidity of an entity.

(a) State FOUR advantages of cash flow accounting.

(b) Highlight THREE of the disclosures which are required by the Standard (with comments) by the management of the entity when preparing the statement of cash flow

(c) Nexis Limited’s statement of profit or loss for the year ended 31 December 20X4 and statement of financial position as at 31 December 20X3 and 20X4 are as follows:

NEXIS LIMITED
Statement of profit or loss for the year ended 31 December 20X4

GH¢’m
Revenue 360
Raw Materials consumed 35
Staff costs 47
Depreciation 59
Loss on disposal of non-current assets 9
150
Operating profit before interest and tax 210
Interest payable 14
Profit before tax 196
Taxation 62
134

NEXIS LIMITED
Statement of Financial Position as at 31 December 20X4

20X4 GH¢’m 20X3 GH¢’m
Non-Current Assets
Cost 798
Depreciation 159
639
Current Assets
Inventory 12 10
Trade receivable 38 29
Bank 24 28
74 67
Total Assets 713
Equity and liabilities
Share capital 198 182
Retained earnings 358 291
556 473
Non-current liabilities
Long-term loans 100 250
Current liabilities
Trade payables 6 3
Taxation 51 43
57 46
Total equity and liabilities 713

Dividend paid was GH¢33 million.
During the year, the company paid GH¢45 million for a new piece of machinery.

Required
Prepare a Statement of Cash Flows for Nexis Limited for the year ended 31 December 20X4, in accordance with the requirements of IAS 7, using the indirect method.

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  • 20 Marks

FR – L2 – Q73 – Statement of Cash Flows

Prepare a cash flow statement for Fellon Plc for 20X4 using IAS 7, based on provided financial data and additional information.

Fellon Plc has prepared the following rough draft accounts for the year ended 31 December 20X4.

Statement of profit or loss

GH₵’000
Revenue 11,563
Cost of sales (5,502)
Gross profit 6,061
Distribution costs (402)
Administration expenses (882)
Interest payable (152)
Operating profit before tax 4,625
Taxation (35%) including deferred tax (1,531)
Profit after tax 3,094
Dividends (700)
Retained profit 2,394

Statements of financial position

31 December 20X4 GH₵’000 31 December 20X3 GH₵’000
Non-current assets
Property, plant and equipment 10,380 9,108
Current assets
Inventories 2,208 1,314
Trade receivables 1,986 1,392
Investments 1,992 2,190
Cash at bank and in hand – 576
6,186 5,472
Total assets 16,566 14,580
Equity and liabilities
Equity
Share capital 4,392 3,600
Retained earnings 6,714 4,320
11,106 7,920
Non-current liabilities
Long-term loans 1,240 1,800
Deferred repairs provision 702 516
1,942 2,316
Current liabilities
Trade payables 2,038 1,714
Bank overdraft 222 –
Taxation 1,258 2,630
3,518 4,344
Total equity and liabilities 16,566 14,580

The following data is relevant.
(1) The 10% long-term loan was redeemed at par.
(2) Plant and equipment with a written down value of GH₵276,000 was sold for GH₵168,000. New plant was purchased for GH₵2,500,000.
(3) Buildings costing GH₵1,300,000 were acquired during the year.
(4) The investments are highly liquid securities held for the short term.

Required
Prepare the cash flow statement and supporting notes in accordance with IAS 7 for Fellon Plc for 20X4.

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  • 20 Marks

FR – L2 – Q72 – Statement of Cash Flows

Prepare a cash flow statement for Model Ltd for 20X4 per IAS 7, using trial balance and additional information.

MODEL LTD
The following trial balance relates to Model Ltd as at 31 December 20X4.

GH¢’000 GH¢’000
Freehold property at cost 5,700
Plant and machinery at cost 36,000
Fixtures and fittings at cost 12,000
Inventories 14,000
Trade receivables 15,200
Long-term investments 4,600
Cash at bank 11,400
Accumulated depreciation: Plant and machinery 12,000
Accumulated depreciation: Fixtures and fittings 7,000
10% Long-term loan 1,800
Ordinary share capital 20,000
Share premium 2,500
Retained earnings 14,000
Revenue 92,000
Cost of sales 60,000
Operating expenses 7,200
Corporation tax 21,500
Trade payables 14,440
Long-term investment income 450
Government stock 3,000
169,250 169,250

The following information is relevant.
(a) There had been no disposal of freehold property in the year.
(b) A machine tool which had cost GH¢8,000,000 (in respect of which GH¢6,000,000 depreciation had been provided) was sold for GH¢3,000,000, and fixtures which had cost GH¢5,000,000 (in respect of which depreciation of GH¢2,000,000 had been provided) were sold for GH¢1,000,000. Profits and losses on those transactions had been dealt with through the statement of profit or loss.
(c) The statement of profit or loss charge in respect of tax was GH¢22,000,000.
(d) The premium paid on redemption of the long-term loan was GH¢2,000,000, which has been written off to the statement of profit or loss.
(e) The proposed dividend for 20X3 had been paid during the year.
(f) Interest received during the year was GH¢450,000. Interest charged in the statement of profit or loss for the year was GH¢6,400,000. Accrued interest of GH¢440,000 is included in payables at 31 December 20X3 (nil at 31 December 20X4).
(g) The government stock is a long-term investment.

Required
Prepare a cash flow statement for the year ended 31 December 20X4, together with notes as required by IAS 7.

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  • 20 Marks

PSAF – L2 – Q11.4 – Preparation and presentation of financial statements for central government

Prepare the cash flow statement for Zamunda Central Government for 2024 with reconciliation notes.

The Central Government of Zamunda: Cash flows statement for the year ended 31st December 2024

Prepare the cash flow statement for the Central Government of Zamunda for the year ended 31st December 2024, based on the following data:

Cash flows from operating activities GHC million
Corporate income tax 38,000
Custom and excise duties 43,000
Value added taxes 45,000
Multilateral grants 16,000
Income tax (PAYE) 15,000
Fee and charges for services 10,000
Dividend and other investment income 7,000
Bilateral grants 12,000
Fines, penalties and forfeitures 9,000
Established post salaries (22,000)
Non-established post salaries (20,000)
13% SSF contribution for staff (7,000)
Staff allowances (8,000)
Administrative cost (15,000)
Seminar and workshops (12,000)
Training and capacity building (6,000)
Foreign travelling cost (5,000)
Repair and maintenance (8,000)
Domestic debt interest paid (12,000)
External debt interest paid (12,000)
Payments for subsidies on utilities (12,000)
Payment for subsidies on fuel (12,000)
Community empowerment program (12,000)
Support for social protection of aged widows (12,000)
Statutory transfers (12,000)
Other expenses (12,000)

Cash flows from investing activities GHC million
Recoveries of loans and advances 8,000
Payment for property, plant and equipment during year (18,000)
Payments for infrastructure during year (20,000)
Loans and advances granted during the year (13,000)

Cash flows from financing activities GHC million
External borrowing during the year 30,000
Domestic borrowing during the year 20,000
Repayment of external borrowing during the year (10,000)

Additional information for notes:

  • Surplus of revenue over expenses for the year ending 2024: GHC 23,200 million
  • Depreciation charged for the year: GHC 3,500 million
  • Increase in inventories: GHC (1,500) million
  • Taxes recoverable: GHC (16,200) million
  • Accrued expenses: GHC 11,000 million
  • Prepaid rent: GHC (5,000) million
    W1 Taxes recoverable GHC million
    Corporate income taxes 3,000
    Customs & excise duties 5,000
    VAT 6,000
    Personal Income Tax 4,000
    Total taxes receivable 18,000
    Less amount estimated as irrecoverable 1,800
    Taxes recoverable 16,200

    W2 Accrued expenses GHC million
    Domestic debt interest 3,000
    External debt interest 4,000
    Accrued salaries 4,000
    Total accrued expenses 11,000

    W3 Prepaid Rent GHC million
    Prepaid Rent 5,000

    Include a reconciliation note for surplus/deficit to cash flows from operating activities.

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  • 20 Marks

PSA – L2 – Q11.2 – Preparation and Presentation of Financial Statements for Central Government

Prepare 2024 cash flow statement for Central Government of Salima with notes.

Prepare the Central Government of Salima: Cash flows statement for the year ended 31st December 2024.

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  • 20 Marks

FA – L1 – Q102 – Statement of cash flows

Prepare a statement of cash flows for ZA Ltd for the year ended 31 May 20X9 using the indirect method per IAS 7.

The statements of financial position for the last two years for ZA Ltd are shown below. ZA Ltd implemented an expansion programme during the year ended 31st May 20X9.

20X8 20X9
GH¢ GH¢ GH¢ GH¢
Non-current assets (net) 380,000 530,000
Current assets
Inventory 80,000 108,000
Receivables 32,000 37,000
Bank 13,000 –
Cash 1,000 3,000
Total assets 506,000 678,000
Current liabilities
Payables 26,000 30,000
Corporation Tax 22,000 28,000
Overdraft – 5,000
Dividends – 21,000
Accruals – 4,000
Total liabilities 68,000 88,000
Capital and Reserves
Ordinary shares 350,000 490,000
General reserve 62,000 62,000
Revaluation reserve – 10,000
Retained earnings 26,000 28,000
Total capital and liabilities 506,000 678,000

Additional information:
(i) The total depreciation provision incorporated in the statements of financial position was GH¢48,000 at 31st May 20X8 and GH¢122,000 at 31st May 20X9.
(ii) During the year ended 31st May 20X9 a non-current asset costing GH¢22,000 with a carrying amount of GH¢6,000 was sold for GH¢1,000. No other disposals took place.
(iii) The revaluation surplus represents a revaluation of premises during the year ended 31st May 20X9.

Required:
(a) Prepare a statement of cash flows for ZA Ltd for the year ended 31st May 20X9 in accordance with IAS 7. (Use the indirect method).

(b) State the effects of the expansion policy on ZA Ltd.

Answer:

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  • 20 Marks

FA – L1 – Q101 – Statement of cash flows

Prepare a statement of cash flows for StarPharma Ltd for the year ended 30 June 20X9 using the indirect method.

The financial statements of StarPharma Ltd, a limited liability company that operates in the pharmaceuticals sector, at 30 June were as follows.

20X9 20X8
GH¢000 GH¢000 GH¢000 GH¢000
Assets
Non-current assets
Property cost 22,000 12,000
Depreciation (4,000) (1,000)
Plant and equipment 18,000 11,000
Cost 5,000 5,000
Depreciation (2,250) (2,000)
2,750 3,000
20,750 14,000
Current assets
Inventories 16,000 11,000
Trade receivables 9,950 2,700
Cash and cash equivalents – 1,300
25,950 15,000
Total assets 46,700 29,000
Equity and liabilities
Capital and reserves
Equity capital 3,000 3,000
Accumulated profits 16,200 3,800
19,200 6,800
Non-current liabilities
Loan 6,000 10,000
Current liabilities
Operating overdraft 11,000
Trade payables 8,000 11,000
Income tax payable 1,800 1,000
Accrued interest 700 200
21,500 12,200
Total equity and liabilities 46,700 29,000

Statement of profit or loss (extracts)
Operating profit
Financing cost (Interest)
Profit before tax
Income tax expense
Net profit for the year

Equipment of carrying amount GH¢250,000 was sold at the beginning of 20X9 for GH¢350,000. This equipment had originally cost GH¢1,000,000.
In recent years, no dividends have been paid.

Required
Prepare a statement of cash flows, under the indirect method, for the year ended 30 June 20X9.

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  • 20 Marks

FA – L1 – Q100 – Statement of cash flows

Prepare a statement of cash flows for SpicyFlare Limited for the year ended 31 December 20X9 using provided financial data.

SpicyFlare Limited
SpicyFlare Limited summarised final accounts are as follows:

Statements of financial position

31 December 20X8 31 December 20X8
GH¢000 GH¢000 GH¢000
Non-current assets:
Plant and machinery at cost 2,700
Accumulated depreciation (748)
Carrying amount 1,952
Current assets:
Inventory 203
Receivables 147
Bank 51
401
Total assets 2,353
Ordinary share capital (GH¢1 shares) 740
Share premium account
Retained earnings 671
1,411
Non-current liabilities:
Loans
Current liabilities:
Bank overdraft
Trade payables and accruals 152
Current taxation 470
Total equity and liabilities 2,353

Statement of profit or loss for year ended 31 December 20X9
Profit before tax
Taxation
Profit after tax
Dividend payments during the year were GH¢230,000.

The following information is also available:
(1) The only new loan raised during the year was a five-year bank loan amounting to GH¢65,000.
(2) Interest charged during the year was GH¢156,000. Interest accrued was GH¢24,000 last year and GH¢54,000 this year.
(3) Depreciation charged during the year amounted to GH¢401,000. This does not include any profit or loss on disposal of non-current assets.
(4) During the year plant which originally cost GH¢69,000 was disposed of for GH¢41,000.
(5) During the year the company issued 200,000 new shares.

Required
Prepare a statement of cash flows.

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  • 20 Marks

FA – L1 – Q99 – Statement of Cash Flows

Prepare a statement of cash flows for Nordex Limited for 20X9 using financial statements and non-current asset details.

The following information has been extracted from the draft financial information of Nordex Limited.

Statement of Profit or Loss for the Year Ended 31 December 20X9

GH¢’000 GH¢’000
Sales revenue 1,350
Administration costs (346)
Distribution costs (246)
Operating profit 758
Interest expense (110)
Profit before tax 648
Taxation (208)
Profit after tax 440
Dividends paid (120)
Retained profit for the year 320

Statements of Financial Position

31 December 20X9 31 December 20X8
GH¢’000 GH¢’000 GH¢’000 GH¢’000
Non-current assets 1,145 957
Current assets
Inventory 157 142
Receivables 203 184
Cash and cash equivalents 41 10
401 401 336 336
Total assets 1,546 1,293
Equity and liabilities
Equity
Share capital 200 200
Revaluation surplus 170 100
Retained earnings 604 404
974 974 704 704
Non-current liabilities
Loans 350 450
Current liabilities
Trade payables 43 43
Taxation 29 36
Accruals 150 100
222 222 179 179
Total equity and liabilities 1,546 1,293

Note on Non-Current Assets

Land and Buildings Machinery Fixtures & Fittings Total
GH¢’000 GH¢’000 GH¢’000 GH¢’000
Cost or Valuation
At 31 December 20X8 830 470 197 1,497
Additions – 43 55 98
Disposals – (18) – (18)
Adjustment on revaluation 70 – – 70
At 31 December 20X9 900 495 252 1,647
Depreciation
At 31 December 20X8 (90) (270) (180) (540)
Charge for the year (10) (56) (8) (74)
Disposals – 12 – 12
Adjustment on revaluation 100 – – 100
At 31 December 20X9 0 (314) (188) (502)
Carrying Amount
At 31 December 20X8 740 200 17 957
At 31 December 20X9 900 181 64 1,145

You have been informed that included within distribution costs is GH¢4,000 relating to the loss on a disposal of a non-current asset.

Required
Prepare a statement of cash flows for Nordex Limited for the year ended 31 December 20X9.

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  • 20 Marks

FA – L1 – Q98 – Statement of cash flows

Prepare a statement of cash flows for Tango Limited for 20X9 using the direct method, based on provided financial statements.

The following information has been extracted from the financial statements of Tango Limited for the year ended 31 December 20X9.

Statement of profit or loss for the year ended 31 December 20X9

GH¢ GH¢
Sales
Cost of sales
Gross profit
Loss on disposal of non-current asset (4,000)
Wages and salaries (137,000)
Other expenses (including depreciation GH¢46,000) (193,000)
Interest charges (19,000)
Profit before tax
Tax on profit
Profit after tax

The asset disposed of had a carrying amount of GH¢31,000 at the time of the sale.

Extracts from the statements of financial position:

At 1 January 20X9 At 31 December 20X9
GH¢ GH¢
Non-current assets 157,000 142,000
Inventory 42,000 45,000
Receivables 43,600 51,000
Cash and cash equivalents 4,000 11,200
Trade payables 45,000 41,000
Taxation payable 10,000 12,000
Interest payable 3,000 2,000

Note on non-current assets

Land and buildings Machinery Fixtures & fittings Total
GH¢000 GH¢000 GH¢000 GH¢000
Cost or valuation
At 31 December 20X8 830 470 197 1,497
Additions – 43 55 98
Disposals – (18) – (18)
Adjustment on revaluation 70 – – 70
At 31 December 20X9 900 495 252 1,647
Depreciation
At 31 December 20X8 (90) (270) (180) (540)
Charge for the year (10) (56) (8) (74)
Disposals – 12 – 12
Adjustment on revaluation 100 – – 100
At 31 December 20X9 0 (314) (188) (502)
Carrying amount:
At 31 December 20X8 740 200 17 957
At 31 December 20X9 900 181 64 1,145

You have been informed that included within distribution costs is GH¢4,000 relating to the loss on a disposal of a non-current asset.

Required
Prepare a statement of cash flows for Tango Limited for the year ended 31 December 20X9.

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