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TALHA SHAHID – ACMA, ACCA FINANCIAL ACCOUNTING – FA

ICMAP Past papers – Question


Question No. 1 – ICMAP [FA – Spring 2005] Q 4 (b) (Direct and Indirect Method)

The income statement of the year ended December 31, 2004 for Javedan Manufacturing Company
contained the following condensed information:

Particulars Rs. in '000


Revenue 6,583
Operating expenses (excluding depreciation) 4,920
1,663
Depreciation expenses 880
Income before income taxes 783
Income tax 353
Net income 430

Partial Balance Sheets of Javedan Manufacturing Company at December 31, 2004 and 2003 are given
below:
JAVEDAN MANUFACUTING COMPANY
COMPARATIVE BALANCE SHEETS (PARTIAL)
2004 2003
Particulars (Rs. in '000)
Cash 672 130
Accounts receivable 775 610
Inventories 834 867
Accounts payables 521 501
Additional information:
(1) Operating expenses include loss of Rs. 24,000 resulting from the sale of machinery for Rs.
270,000 in cash.
(2) Machinery was purchased at a cost of Rs. 750,000.
(3) Income tax of Rs. 353,000 represents the amount paid in 2004.
(4) Dividend declared and paid during 2004 amounted to Rs. 200,000.

Required:
Prepare a statement of cash flow for Javedan Manufacturing Company for the year ended December 31,
2004 under direct method using the format as prescribed by IAS – 7. (Marks 13)

1 ICMAP – AUGUST 2018 EXAM


TALHA SHAHID – ACMA, ACCA FINANCIAL ACCOUNTING – FA
Question No. 2 – ICMAP [FA – Spring 2006] Q 5 (Indirect Method)
Presented below are the comparative balance sheets for Friends Corporation as at December 31:
Friends Corporation
Comparative Balance Sheets
2005 2004
Assets: Rs. Rs.
Cash 195,000 225,000
Accounts receivable 247,500 260,000
Inventory 757,250 710,000
Prepaid expenses 83,900 105,000
Land 500,000 650,000
Equipment 1,140,000 775,000
Accumulated depreciation - Equipment (225,000) (175,000)
Building 1,000,000 1,000,000
Accumulated depreciation - Building (300,000) (200,000)
3,398,650 3,350,000

Accounts payable 193,650 200,000


TFCs payable 1,250,000 1,500,000
Common shares (Rs.10 par) 1,000,000 750,000
Retained earnings 955,000 900,000
3,398,650 3,350,000
Additional information:
1. Depreciation expense for the year was Rs. 210,000.
2. Land was sold for cash at book value.
3. Cash dividend of Rs. 135,000 was paid.
4. Net income for 2005 was Rs. 190,000.
5. Equipment for Rs. 475,000 was purchased for cash. In addition, equipment costing Rs. 110,000
with a book value of Rs. 50,000 was sold for Rs. 40,500 cash.
6. TFCs were converted at face value by using 25,000 common shares of Rs. 10 par.

Required:
Prepare a statement of cash flow for the year ended December 31, 2005 using indirect method as per
IAS – 7. (Marks 15)

2 ICMAP – AUGUST 2018 EXAM


TALHA SHAHID – ACMA, ACCA FINANCIAL ACCOUNTING – FA
Question No. 3 – ICMAP [FA – Fall 2012] Q 2 (b) (Direct and Indirect Method)
Following are the comparative statements of financial position of Hamza Ltd., as of December 31:

Share Capital and Reserves 2011 2010


Authorized Capital: Rs. '000' Rs. '000'
100,000,000 ordinary shares of Rs.10 each 1,000,000 1,000,000
Issued, subscribed and paid up capital 214,000 164,000
Retained earnings 179,250 114,000
393,250 278,000
Non-Current Liabilities
10% Bonds payable 150,000 200,000
Current Liabilities
Accounts payable 30,000 40,000
Interest payable 20,000 20,000
Accrued expenses 4,000 7,000
54,000 67,000
Total Equity and Liabilities 597,250 545,000

Non-Current Assets
Land 71,000 110,000
Plant and equipment (PE) 265,000 200,000
Accumulated depreciation (PE) (67,750) (42,000)
268,250 268,000
Current Assets
Inventories 180,000 189,000
Accounts receivable 84,000 70,000
Allowance for doubtful debts (2,000) (4,000)
Cash and bank balances 67,000 22,000
329,000 277,000
Total Assets 597,250 545,000

The Statement of comprehensive income for the year ended December 31, 2011 is as follows:
(Rs. '000')
Sales 640,000
Cost of sales (380,000)
Gross profit 260,000
Operating expenses (155,000)
Operating income 105,000
Financial charges (20,000)
Gain on sale of equipment 250
Net income 85,250

3 ICMAP – AUGUST 2018 EXAM


TALHA SHAHID – ACMA, ACCA FINANCIAL ACCOUNTING – FA
Additional Information:
(i) Hamza Ltd., has declared and paid cash dividend of Rs. 20 million during the year.
(ii) On December 31, 2011, the company had issued ordinary shares against retirement of
bonds payable amount to Rs. 50 million.
(iii) 10% bonds payable were issued on January 1, 2010; accrued interest is payable on January
1, each year.
(iv) A machine costing Rs. 5 million (which was 25% depreciated) was sold for Rs. 4 million.
(v) Ignore taxation.
Required:
(i) Prepare Statement of Cash Flow using ‘indirect method’ as required by IAS – 7. (Marks 18)
(ii) Determine Free cash flow of Hamza Ltd., as of December 31, 2011. (Marks 02)
Question No. 4 – ICMAP [FA – Spring 2013] Q 3 (Direct and Indirect Method)
The Financial statements of Premier Exporters Limited are as follows:
Statement of Financial Position
As at June 30
2013 2012
ASSETS Rs. '000' Rs. '000'
Non-Current Assets
Property, plant and equipment 12,034 11,436
Intangible fixed assets 1,240 1,304
Long-term loans and advances 682 979
13,956 13,719
Current Assets
Inventory 917 589
Trade receivables 594 385
Advances, deposits and prepayments 378 326
Short-term investments 2,900 2,200
Cash and bank balances 382 288
5,171 3,788
TOTAL ASSETS 19,127 17,507
EQUITY AND LIABILITIES
Ordinary shares @ Rs. 10 per share 12,540 11,400
Share premium 378 150
Retained earnings 1,546 943
14,464 12,493
Non-Current Liabilities
Long-term loans 3,284 3,891
Current Liabilities
Short-term loans 82 101
Payables, accrued and other liabilities 891 597
Bank overdraft 23 43
Provision for taxation 383 382
1,379 1,123
TOTAL EQUITY AND LIABILITIES 19,127 17,507

4 ICMAP – AUGUST 2018 EXAM


TALHA SHAHID – ACMA, ACCA FINANCIAL ACCOUNTING – FA
Statement of Profit and loss
For the year ended June 30, 2013
Rs. '000'
Sales 16,213
Cost of sales (10,900)
Gross profit 5,313
Administrative expenses (3,090)
Selling expenses (625)
(3,715)
Operating profit 1,598
Interest income 343
Financial charges (455)
Profit before tax 1,486
Income tax (340)
Profit for the year 1,146

Un-appropriate profit 2,089

Additional information:
(i) Accumulated depreciation including current year’s depreciation for overall property, plant and
equipment was Rs. 5,215,000 as on June 30, 2012 and Rs. 6,895,000 as on June 30, 2013.
(ii) Plant and machinery costing Rs. 235,000 and having a book value of Rs.143,000 was sold for
Rs.157,000 during 2013.
(iii) There was no addition and disposals of intangible assets during the year.
(iv) Advances, deposits and prepayments include interest receivable amounting to Rs. 125,000 on
June 30, 2012 and Rs. 150,000 on June 30, 2013.
(v) Short term investments are highly liquid with one to two month’s maturity.
(vi) The company issued one right share for 10 previously held shares at premium of 20% of the par
value.
(vii) Retained earnings in statement of financial position are after payment of dividend during the
year out of un-appropriate profit of the company.
(viii) Financial charges represent interest of Rs.452,000 on loans and include bank charges of Rs.
3,000 deducted by bank.
(ix) Payables, accrued and other liabilities include interest payable of Rs. 80,000 and Rs.75,000 as on
June 30, 2012 and June 30, 2013 respectively.

Required:
Prepare Statement of Cash flows for the year ended June 30, 2013 using indirect method including
reconciliation of cash and cash equivalent in accordance with IAS 7 Statement of Cash Flows. (Marks 25)

5 ICMAP – AUGUST 2018 EXAM


TALHA SHAHID – ACMA, ACCA FINANCIAL ACCOUNTING – FA
Question No. 5 – ICMAP [FA – Fall 2013] Q 3* (Indirect Method)
The statement of financial position of Five Star Company is as follows:
Five Star Company
Statement of Financial Position
As at 30 June
2013 2012
ASSETS (Rupees in millions)
Non-Current Assets
Property, plant and equipment 850 630
Software 35 -
885 630
Current Assets
Inventory 54 41
Trade receivables 30 66
Investment in government securities 30 180
Due from construction contract 80 55
cash and bank balances 608 392
802 734
TOTAL ASSETS 1,687 1,364

EQUITY AND LIABILITIES


Equity
Ordinary shares @ Re. 1 each 500 300
Share premium 150 85
General reserves 120 100
Retained earnings 66 40
836 525
Non-Current Liabilities
9% Loan notes (redeemable) 60 100
Bank loan 4% 525 200
585 300
Current Liabilities
Trade payables 71 29
Provision for taxation 95 385
Accrued expenses 100 125
266 539
TOTAL EQUITY AND LIABILITIES 1,687 1,364

6 ICMAP – AUGUST 2018 EXAM


TALHA SHAHID – ACMA, ACCA FINANCIAL ACCOUNTING – FA
Notes:
1. Disposal of non-current assets were:
Sales Proceeds book value at disposal
(Rs. in million) (Rs. in million)
Plant and machinery 10 9.5
Current year’s depreciation charged to profit and loss account is Rs.130 million.
2. The company paid a dividend of Rs. 25 million for the year ended June 30, 2013.
3. The software was purchased on January 1, 2013 for Rs. 40 million.
4. Issued equity bonus shares of one for every four held. Share premium reserve is used for this
issue on January 1, 2013. There was also cash share issued on March 1, 2013.
5. Total tax charge in the statement of profit or loss for the year to June 30, 2013 was Rs. 31
million.
6. Government securities were sold during the year at a profit of Rs. 27 million. This profit was
credited to statement of profit or loss. During the year , no further government securities were
purchased or sold.
7. Rs. 40 million of loan notes were redeemed at par on December 31, 2012. Interest on the loan
notes is paid each year on June 30 and December 31.
8. Rs. 20 million was transfer to general reserve.
9. Additional bank loan of Rs. 325 was obtained on 1 January 2013.

Required:
Statement of Cash flow for the year ended June 30, 2013 using indirect method in accordance with IAS
7. (Marks 20)

7 ICMAP – AUGUST 2018 EXAM


TALHA SHAHID – ACMA, ACCA FINANCIAL ACCOUNTING – FA
Question No. 6 – ICMAP [FA – Spring 2014] Q 3* (Direct & Indirect Method)
The financial statements of Galaxy International Limited are as follows:
Statements of Financial Position
As at June 30
2014 2013
Rs. '000' Rs. '000'
Non-Current Assets
Property, plant and equipment 12,000 13,000
Intangible assets 800 -
Long term loans and advances 900 400
13,700 13,400
Current Assets
Inventory 700 600
Account receivable 600 400
Advances, deposits and prepayments 700 300
Cash at bank - Saving account 1,000 -
- Current account 500 1,500
3,500 2,800
Total Assets 17,200 16,200
Equity
Ordinary shares (@ Rs. 10 per share) 12,000 10,000
Share premium 750 150
Revaluation reserve 1,500 1,000
Retained earnings 1,500 900
15,750 12,050
Non-Current Liabilities
10% Long term loan - 2,500
Current Liabilities
11% short term loan - 100
Accounts payable 800 900
Interest payable 100 200
Bank overdraft - 50
Accrued expenses 250 -
Provision for taxation 300 400
1,450 1,650
Total Equity and Liabilities 17,200 16,200

8 ICMAP – AUGUST 2018 EXAM


TALHA SHAHID – ACMA, ACCA FINANCIAL ACCOUNTING – FA
Statement of Profit or Loss
For the year ended June 30, 2014
Rs. '000'
Sales 16,200
Cost of sales (11,100)
Gross profit 5,100
Administrative expenses (3,000)
Selling expenses (600)
(3,600)
Operating profit 1,500
Interest income 33
Financial charges (105)
Profit before taxation 1,428
Taxation (329)
Profit after taxation 1,099
Profit brought forward 900
Un-appropriate profit 1,999

Other information:
(i) ‘Property, plant and equipment’, includes assets, which have been revalued during the year.
An Asset having written down value of Rs. 200,000 was disposed of during the year, earning
gain of Rs. 50,000.
(ii) On July 1, 2013, software was purchased at a cost of Rs. 1,000,000. It is company’s policy to
amortize all intangible assets over five-year period on straight-line basis and charge
amortization to cost of sales.
(iii) Current depreciation for the year of Rs. 2,000,000 has been charged to cost of sales.
(iv) Previously the company used to keep all its cash in current accounts, however, since
February 1, 2014, the company opened saving accounts yielding interest @ 8% per annum
receivable after every six months. (The interest accrued on investment is included in
advances, deposits and prepayments).
(v) On July 1, 2013, the company issued one right share for 5 previously held share at a
premium of 30% of the par value and utilized the proceeds to pay of all of the long-term and
short-term loans on July 31, 2013. Interest for the month of July 2013, when both loans
were outstanding and some other bank charges are included in financial charges.
(vi) Retained earnings in statement of financial position are after payment of dividend during
the year out of un-appropriate profits of the company.

Required:
Prepare Statement of Cash Flows for the year ended June 30, 2014, including reconciliation of cash and
cash equivalents in accordance with IAS 7 using ‘indirect method’. (Marks 20)

9 ICMAP – AUGUST 2018 EXAM


TALHA SHAHID – ACMA, ACCA FINANCIAL ACCOUNTING – FA
Question No. 7 – ICMAP [FA – Fall 2014] Q 3* (Direct & Indirect Method)
Mehran Textile Mills Limited is engaged in the business of textile for last many years and operating in
competitive market. To remain competitive in the market the management has purchased new
machinery at a cost of Rs.20,000,000 during the year. The financial statement of the company is given
below:
Mehran Textile Mills Limited
Statement of Financial Position
As on June 30, 2014 Rs. ‘000

Assets 2014 2013


Non-Current Assets
Property, plant and equipment 83,250 72,000
Long term loans and advances 9,000 4,000
92,250 76,000
Current Assets
Stock in trade 7,800 4,500
Trade debtors 5,650 4,200
Advances, deposits and prepayments 5,900 3,200
Bank balance - saving account 3,000 -
Cash and bank - current account 600 1,700
22,950 13,600
Total Assets 115,200 89,600
Equity and Liabilities
Equity
Ordinary shares (@ Rs. 10 per share) 70,000 50,000
Share premium 4,000 -
Revaluation reserve 2,000 -
Retained earnings 28,130 25,000
104,130 75,000
Non-Current Liabilities
10% Long term loan - 2,000
Current Liabilities
11% short term loan - 1,000
Creditors 9,918 10,500
Accrued liabilities 323 500
Bank overdraft - 100
Accrued expenses 500 -
Provision for taxation 329 500
11,070 12,600
Total Equity and Liabilities 115,200 89,600
Mehran Textile Mills Limited
Statement of Profit or Loss
For the year ended June 30, 2014

10 ICMAP – AUGUST 2018 EXAM


TALHA SHAHID – ACMA, ACCA FINANCIAL ACCOUNTING – FA
Rs. ‘000’
2014
Sales 56,200
Cost of sales (35,300)
Gross profit 20,900
Less: Administrative expenses (15,000)
Selling expenses (2,500)
(17,500)
Operating profit 3,400
Interest income 240
Financial charges (181)
Profit before tax 3,459
Income tax (329)
Profit after tax 3,130
Retained earnings brought forward 25,000
Retained earnings carried forward 28,130

Additional information:
(a) The carrying value of property, plant and equipment are as follows:
Rs. ‘000’
2014 2013
Land 12,000 10,000
Building 38,000 40,000
Machinery - New 16,000 -
Machinery - Old 8,000 10,000
Office equipment 4,250 5,000
Furniture and fixture 3,200 4,000
Vehicles for Executive Management 1,800 2,000
Staff bus - 1,000
Total carrying amount 83,250 72,000
(b) Land has been revalued during the year while staff bus was sold for Rs. 1,200,000. Depreciation
and impairment on building and machines are charged to cost of sales while deprecation on
other assets is charged to administrative expenses.
(c) The yield on saving accounts is 8% per annum and the accounts were opened in a bank on July 1,
2013.
(d) On July 1, 2013 the company issued two (02) right shares for every five (05) shares held by its
existing shareholders at a premium of 20% of the par value.
(e) The company paid all long term and short term loans on January 31, 2014. Interest on loans is
included in financial charges. However, no interest is outstanding on June 2014.
Required:
Prepare a cash flow statement using indirect method for the year ended June 30, 2014 including
reconciliation of cash and cash equivalents in accordance with IAS 7. (Marks 20)

11 ICMAP – AUGUST 2018 EXAM


TALHA SHAHID – ACMA, ACCA FINANCIAL ACCOUNTING – FA
Question No. 8 – ICMAP [FA – Spring 2015] Q 3* (Direct & Indirect Method)
The financial statements of Five Star Company are as follows:
Statement of Profit or Loss for the year ended December 31, 2014 Rs. in million
Revenue 2,870
Cost of sales (2,420)
Gross profit 450
Gain on investment 10
Distribution costs (70)
Administrative expenses (175)
Finance costs (25)
Profit before tax 190
Income tax expense (80)
Profit for the year 110
Other comprehensive income:
Gain on property revaluation 50
Total comprehensive income 160
Statement of Financial Position as at December 31, Rs. in million
2014 2013
Non-current Assets
Property, plant and equipment 1,615 1,060
Investment 205 200
1,820 1,260
Current Assets
Inventory 630 405
Trade receivables 240 270
Income tax assets - 25
Cash and bank balances 19 7
889 707
Total Assets 2,709 1,967
Equity
Equity shares of Rs. 10 each 500 300
Share premium 300 -
Revaluation surplus 75 25
Retained earnings 720 655
1,595 980
Non-current Liabilities
6% loan notes (redeemable) 391 432
Current Liabilities
Trade payables 614 533
Bank overdraft 9 7
Current tax payable 100 15
723 555
Total Equity and Liabilities 2,709 1,967

12 ICMAP – AUGUST 2018 EXAM


TALHA SHAHID – ACMA, ACCA FINANCIAL ACCOUNTING – FA
Additional information:
(i) The land was revalued upward by Rs.50 million. A new plant was purchased for Rs.300
million by issuing 12 million ordinary shares of Rs.10 each at a premium of Rs. 15. Old
furniture having cost and accumulated depreciation of Rs. 16 million and Rs. 10 million
respectively was sold at a loss of Rs. 2 million. Depreciation for the year is Rs. 177 million.
(ii) 6% loan notes were converted into 6 million ordinary shares of Rs. 10 each on July 1, 2014,
when the market value of each share was Rs. 25.
(iii) Investment sold during the year having cost of Rs.60 million.
Required:
Prepare statement of Cash Flows of Five Star Company for the year ended December 31, 2014 using
‘indirect method’ as per IAS 7. (Marks 20)

Question No. 9 – ICMAP [FA – Fall 2015] Q 3* (Indirect Method)


The following relates to Tehraz Company for the year ended June 30, 2015:
Statement of Financial Position
As on June 30
Rs. in '000'
2015 2014
Assets
Non-current Assets
Property, plant and equipment 50,500 39,000
Investment 5,300 6,000
Intangible assets 7,500 8,000
63,300 53,000
Current assets
Inventories 3,500 2,000
Trade receivables 1,000 1,500
Cash and bank balances 500 2,000
5,000 5,500
Total assets 68,300 58,500
Equity and liabilities
Share capital @ Rs. 10 each 25,000 25,000
Retained earnings 33,930 24,350
Revaluation surplus 2,500 2,000
61,430 51,350
Non-current liabilities
Long term loan 2,900 3,700
Current liabilities
Trade and other payables 950 1,050
Interest payable 850 750
Dividend payable 1,250 1,000
Accrued expenses 400 300
Provision for taxation 520 350
3,970 3,450
68,300 58,500

13 ICMAP – AUGUST 2018 EXAM


TALHA SHAHID – ACMA, ACCA FINANCIAL ACCOUNTING – FA
The following information is relevant for the year:
 During the year, Tehraz Company sold investment at Rs. 1,800,000 had a cost of Rs. 1,500,000.
 During the year, the management sold part of its ‘property plant and equipment’ for Rs.
2,000,000 having carrying value of Rs. 1,500,000 and revaluation surplus of Rs. 300,000 on the
date of sale.
 During the year, the management charged deprecation of Rs. 1,800,000.
 During the year, the management wrote-off intangible assets of Rs.800,000 due to obsolescence
and purchased new intangible assets of Rs. 1,200,000. During the year, there were no sales of
intangible assets.
 Interest and tax expenses for the year are Rs. 700,000 and Rs. 800,000 respectively.
 Dividend declared for the year is Rs. 1,250,000.

Required:
Prepare Statement of Cash flow using indirect method of Tehraz Company for the year ended June 30,
2015. (Marks 25)

Question No. 10 – ICMAP [FA – Spring 2016] Q 3 (Indirect Method)


Following financial statements pertain to Bright Sun Limited:
Statement of Financial Position
As at December 31,
Rs. in '000'
2015 2014
Assets
Non-current assets
Property, plant and equipment 8,525 7,270
8,525 7,270
Current assets
Inventory 1,250 1,110
Trade receivables 510 535
Short-term investments 1,500 -
Cash and bank balances 270 375
3,530 2,020
Total assets 12,055 9,290
Equity and liabilities
Equity
Share capital 5,000 3,000
Share premium 150 1,050
General reserves 3,250 2,500
Revaluation reserve 750 -
Retained earnings 880 720
10,030 7,270
Non-current liabilities
10% debentures 500 750
500 750

14 ICMAP – AUGUST 2018 EXAM


TALHA SHAHID – ACMA, ACCA FINANCIAL ACCOUNTING – FA
Current liabilities
Trade payables 225 340
Current tax payable 700 430
Dividend payable 600 500
1,525 1,270
12,055 9,290

Statement of Profit and Loss


For the year ended December 31, 2015

Rs. '000'
Net profit before interest and tax 2,520
Finance costs (50)
Net profit before tax 2,470
Taxation (660)
Profit for the year 1,810
Transfers to general reserves (750)
Dividend (900)
Retained profit for the year 160
Retained profit brought down 720
Retained profit carried down 880

Additional information:
 During the year ended on December 31, 2015 following assets were disposed of:

Accumulated Sale Book Gain / (Loss)


Cost
depreciation Price Value on sales

Plant and
600,000 475,000 110,000 ? ?
machinery

Motor vehicles 425,000 ? 140,000 75,000 ?


Office
50,000 25,000 ? ? (10,000)
equipment

 On January 1, 2015, 10% debentures were redeemed at par.


 During the year, the company issued one bonus share for every three shares held. The balance
in share premium account was used for this purpose. The remaining shares were issued at a
premium of 10% against cash.
 The depreciation charge for the year is Rs. 285,000.
 Revaluation of land resulted in an increase of Rs. 750,000.
 Short-term investment can be converted into cash within 3 month period.

15 ICMAP – AUGUST 2018 EXAM


TALHA SHAHID – ACMA, ACCA FINANCIAL ACCOUNTING – FA
Required:
Prepare ‘Statement of Cash Flow’ for the year ended December 31, 2015 using ‘indirect method’ as per
the requirement of IAS 7 – Statement of Cash Flows. (Marks 20)

Question No. 11 – ICMAP [FA – Spring 2017] Q 3 (Direct Method)


Mahnoor Company is a manufacturing company, established in 1991. It produces abrasives that are
distributed locally and exported internationally. Following is the statement of financial position of
Mahnoor Company as at December 31, 2016:
Mahnoor Company
Statement of Financial Position
As at December 31
Rupees
2016 2015
Assets
Non-current assets 2,240,460 2,300,460
Current assets:
Trade receivables 5,190,000 3,987,600
Cash 2,477,490 -
Total current assets 7,667,490 3,987,600
Total assets 9,907,950 6,288,060
Equity and liabilities
Equity:
Share capital 3,000,000 3,000,000
Reserves 2,124,600 -
Total equity 5,124,600 3,000,000
Liabilities:
current liabilities 4,783,350 3,288,060
Total equity and liabilities 9,907,950 6,288,060
Following is the extract of the statement of profit or loss for the year ended December 31, 2016:
Mahnoor Company
Extract from the statement of Profit or Loss
For the year ended December 31, 2016
Rupees
Sales revenue 23,841,705
Cost of sales:
Purchase (no inventory) 16,587,450
wages and salaries 2,188,500
Administrative expenses: (18,775,950)
Purchases 1,441,155
Salaries 1,500,000 (2,941,155)
Operating profit for the year 2,124,600

16 ICMAP – AUGUST 2018 EXAM


TALHA SHAHID – ACMA, ACCA FINANCIAL ACCOUNTING – FA
Additional information:
 Payables consist of:
2016 2015
Non-current assets 690,000 -
Other 3,873,600 3,158,460
Wages accrued 219,750 129,600
 Purchase invoices relating to the acquisition of non-current assets totaling Rs.1,200,000 have
been posted to the payable ledger during the year.

Required:
Calculate the net cash flow from operating activities using the direct method for the year ended
December 31, 2016. (Marks 14)

17 ICMAP – AUGUST 2018 EXAM


TALHA SHAHID – ACMA, ACCA FINANCIAL ACCOUNTING – FA

ICAP Past papers – Question


Question No. 12 – ICAP [CAF 05 – Spring 2007] Q 3 (Indirect Method)
The balance sheets of Fazal Din as at December 31, 2005 and 2006 are as follows:

2005 2006
Cash in hand 200,000 300,000
Debtors - net 450,000 500,000
Stocks 400,000 650,000
Prepaid expenses 100,000 50,000
Fixed assets 1,150,000 1,650,000
Allowance for depreciation (75,000) (175,000)
2,225,000 2,975,000

Creditors 400,000 515,000


Accrued expenses 125,000 100,000
Bank overdraft 300,000 785,000
Capital 1,400,000 1,575,000
2,225,000 2,975,000
Other information:
(i) Value of land included in fixed assets in 2005 amounted to Rs. 450,000.
(ii) Another plot of land was acquired during the year from a relative, at a cost of Rs. 350,000.
(iii) Mr. Fazal Din withdrew Rs. 100,000 out of profit made during 2006.
(iv) An equipment costing Rs. 100,000 and having a book value of Rs. 40,000 was sold during the
year for Rs. 60,000.
Required:
A statement of cash flow for the year ended December 31, 2006. (Marks 10)

Question No. 13 – ICAP [CAF 05 – Autumn 2007] Q 7 (Indirect Method)


The following information has been gathered from the books of Rehan Brothers for the year ended June
30, 2007:
(i) A loss of Rs. 453,000 was sustained during the year.
(ii) Repairs to building amounting to Rs. 50,000 were erroneously debited to accumulated
depreciation – building account.
(iii) Deprecation for the year amounted to Rs. 163,000.
(iv) Current assets (net of provision) and current liabilities increased by Rs. 70,000 and Rs.90,000
respectively.
(v) A plot of land for which Rs. 390,000 had been paid was sold for Rs. 600,000.
(vi) A lather machine costing Rs. 200,000 was sold for Rs. 50,000. It was bought six years back.
Depreciation had been provided at the rate of 10% on straight-line basis assuming 20%
scrap value.
(vii) A fully depreciated office equipment costing Rs. 5,600 was written off.
(viii) An old computer costing Rs. 30,000 and book value of Rs. 10,000 was traded in for a new
machine costing Rs. 65,000 on payment of Rs. 50,000.

18 ICMAP – AUGUST 2018 EXAM


TALHA SHAHID – ACMA, ACCA FINANCIAL ACCOUNTING – FA
Required:
Cash flow statement for the year ended June 30, 2007. (Marks 09)

Question No. 14 – ICAP [CAF 05 – Spring 2009] Q 3 (Indirect Method)

The comparative balance sheets of Mr. Moosani show the following information:

Amount in Rupees
December 31
2008 2007
Cash 5,200 41,400
Accounts receivable 31,700 21,500
Inventory 25,000 19,400
Investments - 16,900
Furniture 80,000 64,000
Equipment 86,000 43,000
Total 227,900 206,200

Allowance for doubtful accounts 6,500 9,700


Accumulated depreciation on equipment 24,000 18,000
Accumulated depreciation on furniture 8,000 15,000
Trade creditors 10,800 6,500
Accrued expenses 4,300 10,800
Bills payable 6,500 8,600
Long-term loans 31,800 53,800
Capital 136,000 83,800
Total 227,900 206,200

Additional data related to 2008 is as follows:


(i) Equipment that had costed Rs. 23,000 and was 40% depreciated at the time of disposal
was sold for Rs. 6,500.
(ii) Payments against long-term loans amounted to Rs. 22,000 of which Rs. 12,000 was
paid by Mr. Moosani out of his personal account.
(iii) On January 1, 2008, the furniture was completely destroyed by a fire. Proceeds received
from the insurance company amounted to Rs. 60,000.
(iv) Investments were sold at Rs. 7,500 above their cost.
(v) Mr. Moosani withdraws Rs. 15,000 each month for his personal use.
Required:
Prepare a cash flow statement for the year ended December 31, 2008. (12)

19 ICMAP – AUGUST 2018 EXAM


TALHA SHAHID – ACMA, ACCA FINANCIAL ACCOUNTING – FA
Question No. 15 – ICAP [CAF 05 – Spring 2010] Q 7 (Indirect Method)

The balance sheets of Sakhawat Hussain as at December 31, 2009 and 2008 are as follows:

2005 2006
Rupees
Current assets 4,750,000 2,850,000
Investments 2,600,000 2,500,000
Fixed assets 9,750,000 9,600,000
Accumulated depreciation (2,950,000) (2,450,000)
14,150,000 12,500,000

Current liabilities 2,050,000 1,600,000


Capital 11,000,000 10,000,000
Profit and loss account 1,100,000 900,000
14,150,000 12,500,000

Other information for the year 2009 is as follows:


(i) Investments costing Rs. 250,000 were sold for Rs. 320,000.
(ii) Fully depreciated furniture costing Rs. 200,000 was written-off.
(iii) Fixed assets costing Rs. 960,000 with a net book value of Rs. 160,000 were sold for Rs.
250,000.
(iv) Sakhawat Hussain withdrew Rs. 1,200,000 from the profit of 2008 and 2009.
(v) 20% of the opening and closing balances of current assets are represented by cash.

Required:
Prepare a statement of cash flow for the year ended December 31, 2009. (Marks 11)

Question No. 16 – ICAP [CAF 05 – Autumn 2008] Q 5 (Indirect Method)

Q.5 A shopkeeper made a net profit of Rs. 256,800 for the year ended June 30, 2008 after
charging depreciation of Rs. 17,500 and loss on disposal of furniture of Rs. 6,800. The sale
proceeds of the furniture were Rs. 12,000.
During the year, the net book value of fixed assets decreased by Rs. 7,400; debtors
increased by Rs. 11,700; stocks decreased by Rs. 21,600 and creditors increased by
Rs. 8,900. A long-term loan of Rs. 75,000 was repaid during the year and the shopkeeper
withdrew Rs. 120,000 for his own use.

Required:
Prepare the cash flow statement for the year ended June 30, 2008. (07)

20 ICMAP – AUGUST 2018 EXAM


TALHA SHAHID – ACMA, ACCA FINANCIAL ACCOUNTING – FA
Question No. 17 – ICAP [CAF 05 – Spring 2011] Q 4 (Direct & Indirect Method)
Mr. Junaid Janjua has provided you the following balance sheet and income statement.

Balance Sheet as on December 31, 2010

2010 2009
Rupees
Cash 145,000 32,000
Accounts receivable 280,000 104,000
Long-term investments 220,000 170,000
Inventory 424,000 200,000
Prepaid insurance 24,000 36,000
Office supplies 14,000 7,000
Land 1,810,000 2,500,000
Building 2,800,000 2,300,000
Accumulated depreciation (890,000) (720,000)
Equipment 1,200,000 1,150,000
Accumulated depreciation (380,000) (350,000)
Total assets 5,647,000 5,429,000

Accounts payable 158,000 263,000


Wages payable 40,000 24,000
Short-term loans 580,000 580,000
Long-term loans 985,000 1,160,000
Capital 3,884,000 3,402,000
Total liabilities and equity 5,647,000 5,429,000

Income Statement for the year ended December 31, 2010

2010
Rupees
Sales revenue 9,280,000
Cost of goods sold (6,199,000)
Gross margin 3,081,000
Operating expenses
Selling expenses 634,000
Administrative expenses 1,348,000
Depreciation expenses 230,000
2,212,000
Income from operations 869,000
Other revenues/expenses
Gain on sale of land 64,000
Gain on sale of long term investment 32,000
Loss on sale of equipment (15,000)
81,000
Net income 950,000
Drawings 568,000
Profit and loss account 382,000

Notes :
(a) Part of the long term loan amounting to Rs. 100,000 was paid by Mr. Junaid from his
personal account.
(b) Long term investments costing Rs. 100,000 were sold during the year.
(c) Depreciation charged during the year on equipment amounted to Rs. 60,000.
Equipment having a book value of Rs. 75,000 was sold during the year.

Required:
Prepare a cash flow statement for the year ended December 31, 2010. (14
marks)

21 ICMAP – AUGUST 2018 EXAM


TALHA SHAHID – ACMA, ACCA FINANCIAL ACCOUNTING – FA
Question No. 18 – ICAP [CAF 05 – Autumn 2011] Q 2 (Indirect Method)
The balance sheet of Amin Industries as at 31 August 2011 is as follows:

2011 2010 2011 2010


Rupees Rupees
Capital 33,433,000 27,942,000 Fixed assets – book 15,172,000 12,346,000
value

Current liabilities Current assets


Short term finance 2,545,000 1,616,000 Investments 4,911,000 -
Creditors 3,457,000 2,850,000 Stock-in-trade 12,178,000 14,950,000
6,002,000 4,466,000 Trade debts – net of
provision for bad
debts 6,732,000 4,887,000
Bank 442,000 225,000
24,263,000 20,062,000
39,435,000 32,408,000 39,435,000 32,408,000

The following information is also available:

Rupees
Profit during the year ended 31 August 2011 3,161,000
Mr. Amin’s withdrawals during the year 3,120,000
Accumulated depreciation on fixed assets – 31 August 2010 5,605,000
Accumulated depreciation on fixed assets – 31 August 2011 7,470,000
Provision for bad debts – 31 August 2010 385,000
Provision for bad debts – 31 August 2011 484,000
During the year fixed assets costing Rs. 1,500,000 with a book value of Rs. 867,000
were sold for Rs. 1,284,000.

Required:
Prepare a cash flow statement for the year ended 31 August 2011. Show necessary workings.
(13
marks)

22 ICMAP – AUGUST 2018 EXAM


TALHA SHAHID – ACMA, ACCA FINANCIAL ACCOUNTING – FA
Question No. 19 – ICAP [CAF 05 – Autumn 2013] Q 7 (Indirect Method)
Q.7 A summary of revenues and expenses of AB Enterprise for the year ended 30 June 2013 is
given below:

Rupees
Sales 2,345,000
Cost of goods manufactured and sold (1,624,000)
Gross profit 721,000
Selling, general and administrative expenses (509,000)
Net income before income tax 212,000
Income tax (90,000)
Net income 122,000

Net changes in working capital items for the year ended 30 June 2013 were as follows:

Net changes
Dr. Cr.
Cash 32,000
Trade receivables (net) 74,000
Inventories 105,000
Prepaid expenses (selling and general) 6,000
Accrued expenses 15,000
Income tax payable 28,000
Trade payables 90,000

Depreciation for the year amounted to Rs. 68,000.

Required:
Prepare a cash flow statement for the year ended 30 June 2013. (07)

23 ICMAP – AUGUST 2018 EXAM


TALHA SHAHID – ACMA, ACCA FINANCIAL ACCOUNTING – FA
Question No. 20 – ICAP [CAF 05 – Spring 2014] Q 7 (Indirect Method)
Q.7 Galaxy Brothers commenced their business on 1 January 2013 with cash of Rs. 50 million, a
building valued at Rs. 25 million and a motor vehicle costing Rs. 1.4 million. Following is
the summarised Trial Balance as of 31 December 2013:
Debit Credit
Particulars
Rs. in million
Sales 136.00
Cost of sales (including depreciation expense of Rs. 9 million) 83.50
Operating and selling expenses (including depreciation expense of Rs. 6.25 million) 37.30
Miscellaneous income (net of loss of Rs. 0.35 on settlement of total loss claim) 0.50
Finance charges 2.50
Taxation expense 6.00
Cash and bank balances 5.00
Bank overdraft 23.00
Accounts receivable 18.00
Provision for doubtful debts 0.90
Closing inventory 10.00
Accounts payable 14.00
Interest payable 1.20
Provision for taxation (net of payments) 1.00
Partners' capital (net of cash withdrawals) 73.95
12% Long term loan payable 25.00
Property, plant and equipment 128.25
Accumulated depreciation 15.00
290.55 290.55

Settlement of the insurance claim pertained to an accident of a new car costing Rs. 1.8
million and having a depreciation charge of Rs. 0.25 million for the period in use.

Required:
Prepare a statement of cash flow for the year ended 31 December 2013.

24 ICMAP – AUGUST 2018 EXAM


TALHA SHAHID – ACMA, ACCA FINANCIAL ACCOUNTING – FA
Question No. 21 – ICAP [CAF 05 – Spring 2015] Q 4 (Indirect Method)
(b) Following is the draft balance sheet of XYZ Limited as at 31 December 2014 which
was prepared by its accountant:
Rs. in Rs. in
Assets Equities and liabilities
million million
Leasehold land – cost 250 Capital 1,000
Leasehold land – accumulated amortisation (200) Accumulated profit 1,816
Building – cost 1,000 Long term bank loan 200
Building – accumulated depreciation (500) Trade payables 228
Machinery – cost 1,750 Income tax payable 85
Machinery – accumulated depreciation (1,150) Accrued interest 13
Long term deposit 70
Stocks 910
Account receivables – net of provision 361
Cash and bank 851
3,342 3,342

Additional information:
(i) Profit before tax and income tax expenses for the year amounted to Rs. 275
million and Rs. 13 million respectively.
(ii) Balances as at 31 December 2013 were as under:
Rs. in million
Stock 703
Account receivables – net of provision 418
Cash and bank 243
Trade payables 150
Income tax payable 80
Long term deposit 70

The company follows a policy of maintaining provision for bad debts equal to
5% of account receivables.

(iii) The bank loan was obtained on 1 January 2014 and carries interest @ 9% per
annum.
(iv) XYZ uses straight line method for depreciation. Rates of depreciation are as
under:
Leasehold land 2%
Building 5%
Machinery 10%

Full month’s depreciation is provided in the month of acquisition but no


depreciation is charged in the month of disposal. Depreciation for the year 2014
has already been provided.

On review the CFO has discovered the following:


A machine with list price of Rs. 50 million was purchased on 1 January
2014. An amount of Rs. 30 million had been paid in cash whereas Rs. 20
million were adjusted against trade-in of a machine costing Rs. 40 million
and having a book value of Rs. 25 million. The transaction was recorded
by debiting the plant and machinery account by Rs. 30 million i.e. the net
amount paid to the supplier.
One of the company's customers became bankrupt during the year. Rs. 5
million out of total debt of Rs. 25 million were recovered from him.
Balance has to be written off.

Required:
Prepare a statement of cash flow as at 31 December 2014. (20)

25 ICMAP – AUGUST 2018 EXAM


TALHA SHAHID – ACMA, ACCA FINANCIAL ACCOUNTING – FA
Question No. 22 – ICAP [CAF 05 – Spring 2016] Q 6 (Indirect Method)
Q.6 Following are the extracts from income statement of Quality Enterprises (QE) for the year
ended 31 December 2015 and its statement of financial position as at that date, together with
some additional information:

Income statement for the year ended 31 December 2015


Rs. in ‘000
Profit from operations 6,402
Other income 1,357
Interest expense (100)
Profit before tax 7,659
Income tax expense (1,376)
Profit for the year 6,283

Statement of financial position as at 31 December 2015


2015 2014 2015 2014
Equity and liabilities Assets
--- Rs. in ‘000 --- --- Rs. in ‘000 ---
Non-current assets
Owner’s capital 14,219 10,703 Property, plant and equipment 19,628 11,845
Unappropriated profit 10,652 6,697 Investments 7,645 6,498
27,273 18,343
Revaluation surplus 2,676 1,911
10% bank loan 6,000 -
Current liabilities Current assets
Trade and other payables 3,337 4,953 Inventories 4,642 3,073
Income tax payable 1,300 994 Trade and other receivables 2,273 3,865
Bank overdraft - 27 Cash and bank 3,996 4
4,637 5,974 10,911 6,942
38,184 25,285 38,184 25,285

Additional information:
(i) During the year, movements in property, plant and equipment include:
Depreciation amounting to Rs. 5,280,000.
Machinery having a carrying amount of Rs. 2,481,000 was sold for Rs. 3,440,000.
Factory building was revalued from a carrying amount of Rs. 5,963,000 to
Rs. 8,000,000.
An office building which had previously been revalued, was sold at its carrying
amount of Rs. 2,599,000.

(ii) The owner of QE withdrew Rs. 300,000 per month. The amounts were debited to
unappropriated profit.
(iii) Trade debts written off during the year amounted to Rs. 200,000. The provision for
bad debts as at 31 December 2015 was Rs. 400,000 (2014: Rs. 550,000)
(iv) The interest on bank loan is payable on 30th June every year. The bank loan was
received on 1 November 2015. Interest for two months has been accrued and included
in trade and other payables.
(v) Other income includes investment income of Rs. 398,000. As at 31 December 2015,
trade and other receivables included investment income receivable amounting to Rs.
96,000 (2014: Rs. 80,000).

Required:
Prepare a statement of cash flows for Quality Enterprises for the year ended
31 December 2015, using the indirect method. (18)

26 ICMAP – AUGUST 2018 EXAM


TALHA SHAHID – ACMA, ACCA FINANCIAL ACCOUNTING – FA
Question No. 23 – ICAP [CAF 05 – Spring 2017] Q 6 (Indirect Method)

Q.6 The statement of financial position of Liaquat Industries as at 31 December 2016 is as


follows:
2016 2015 2016 2015
Equity and liabilities Assets
-------- Rupees -------- -------- Rupees --------
Owner’s capital 13,938,060 13,665,280 Freehold land 4,778,400 6,600,000
Long-term loan 1,000,000 1,000,000 Building – WDV 5,057,600 4,171,200
Short term loan 1,331,200 1,531,200 Vehicle – WDV 600,000 800,000
Accounts payable 417,120 694,320 Equipment – WDV 1,643,100 2,112,000
Accrued interest 105,600 63,360 Capital work in progress 1,478,400 1,821,600
Long-term deposits 580,800 448,800
Inventory 685,608 320,628
Accounts receivable 1,273,272 595,452
Cash 694,800 84,480
16,791,980 16,954,160 16,791,980 16,954,160

The following information has been extracted from income statement:


Rupees
Depreciation expenses 932,500
Finance cost 141,872
Gain on sale of fixed assets (net) 98,960
Net profit before tax 1,525,948

Additional information:
(i) Details of gain on sale of fixed assets are as follows:

Rupees
Gain on sale of freehold land 168,960
Loss on disposal of equipment due to fire (70,000)
98,960

The loss on disposal of equipment represents the WDV of the equipment. The
amount of insurance claim received, amounting to Rs. 30,000 was erroneously
credited to accumulated depreciation.

(ii) Repairs to building amounting to Rs. 50,000 were erroneously debited to building
account on 31 December 2016.
(iii) Transfers from capital work in progress to building amounted to Rs. 1,200,000.
(iv) The owner withdrew Rs. 150,000 per month.

Required:
Prepare statement of cash flows for the year ended 31 December 2016, in accordance with
IAS – 7 using indirect method. (12)

27 ICMAP – AUGUST 2018 EXAM