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Question 1
Reynolds a chain of stores has the following extracts from the accounts:
Interest Received 5
Gain on Disposal of equipment 7
Depreciation (39)
Administrative expenses (13)
Operating profit 137
Interest paid (20)
Profit before Tax 117
Tax (35)
Profit after Tax 82
Current Assets
Stock 26 20
Trade Receivables (Debtors) 23 21
Cash 43 6
92 47
Current Liabilities
Trade Payables (Creditors) (18) (13)
Interest payable (8) (7)
Taxes payable (10) (7)
(36) (27)
56 20
Non Current Liabilities
Long-Term loans (26) (18)
Net Assets 246 160
The dividend paid during 2007 was 31m. The retained earnings increased by the
82m profit and decreased by the dividend of 31m.
During year 2 Reynolds acquired vehicles costing 90m and sold vehicles for 20m
that had an original cost of 25m and had an accumulated depreciation of 12m.
Question 2
The following changes in the main accounting statements have been noted in
Neutrino PLC for June 2006 to June 2007
a) Produce a cash flow statement for Neutrino PLC for the year ended June 2007. (18
marks)
Question 3
Salcombe a boatyard has the following results for the year ending 31 May 2006:
Sales 4,927,000
Cost of sales
Opening stock 310,040
Purchases 3,866,130
4,176,170
Less: closing stock (367,600)
3,808,570
Gross profit 1,118,430
Interest received 8,040
Expenses (627,340)
Net profit 499,130
Produce the initial part of the cash flow statement showing the net cash inflow or
outflow from operating activities for Salcombe.
Question 4
The following changes in the main accounting statements have been noted in CERN
PLC for the period June 2006-June 2007
Produce a cash flow statement for CERM PLC for the year ended June 2007
Question 5
Compile a cash flow statement from the accounts below using the indirect
method.
Revenue 246
Cost of sales (110)
Gross Profit 136
Investment income interest received 4
Gain on disposal of equipment 5
Depreciation (30)
Administrative and selling expenses (10)
Operating profit before interest 105
Interest expense (15)
Profit after deducting interest 90
Taxation (30)
Profit after tax 60
Current Assets
Stock 20 15
Trade Receivables (Debtors) 18 16
Cash 32 5
70 36
Current Liabilities
Trade Payables (Creditors) (14) (13)
Interest payable (6) (7)
Taxes payable (8) (7)
(28) (27)
42 9
Question 6
Capital 40 40
Retained Profits 30 17
70 57
A fixed asset which had originally cost 4000 and on which depreciation of
2000 had been charged was sold during the year for 3000. The profit was
included in the income statement. No fixed assets were bought during the
year.
b) The management of working capital is an important aspect of cash financial
management. Outline some of the financial techniques available in working
capital management which can help \improve cash flow in a business.
(10 marks)
Question 7
The following information relates to Sonia Ltd for the year ended 30 th June
2008.
Gross Profit 229
Administration Expenses 76
Loss on sale of vehicle 3
Depreciation on vehicles 35 114
Net Profit 115
Taxation 65
50
Dividends 25
Retained Profit 25
2008 2007
Non Current Assets
Vehicle at cost 200 150
Less Depreciation 100 75
100 75
Current Assets
Inventory 50 60
Trade Receivables 95 76
Cash 8 6
153 142
Current Liabilities
Trade Payables 53 60
Taxation 65 52
Proposed Dividend 25 20
143 132
253 217
The company purchased some new vehicles during the year for 75,000 and
sold a vehicle for 12,000 in cash. The vehicle had originally cost 25,000
and 10,000 had been set aside for depreciation.
a) Prepare a cash flow statement for Sonia Ltd for the year ended 30 th
June 2008. ( 20 marks)
b) What does this statement tell the managers of Sonia Ltd? ( 5 marks)