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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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  • 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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