Explain two reasons why a business prepares a statement of cash flows in addition to an income statement and a statement of financial position.
Explain two reasons why a business prepares a statement of cash flows in addition to an income statement and a statement of financial position.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Explain two reasons why a business prepares a statement of
income statement and a
![The statements of financial position for W Limited are as follows:
31 December
Non-current assets
Land and buildings
Cost/valuation
Accumulated depreciation
Plant and equipment
Cost
Accumulated depreciation
Current assets
Inventory
Trade receivables
Cash and cash equivalents
Total Assets
Equity and Liabilities
Ordinary share capital ($1 shares)
Share premium
Revaluation reserve
Retained earnings
Non-current liabilities
12% debenture (2030)
Current liabilities
Trade payables
Bank overdraft
Total liabilities
Total equity and liabilities
2021
$000
1150
201
949
539
326
213
1162
117
135
252
1414
600
120
80
136
936
150
86
242
328
478
1414
2020
$000
650
160
490
454
274
180
670
89
103
37
229
899
400
70
109
579
200
120
120
320
899
The following information is also available.
1
The cost of land and buildings at 31 December 2020 comprised of land $250000 and buildings
$400 000. The land, which is not depreciated, had been revalued to $330000 on 1 July 2021.
2
On 1 March 2021, a final dividend for 2020 of $0.20 per share was paid.
3
An additional 200 000 ordinary shares were issued on 1 April 2021.
4
On 1 September 2021 an interim dividend of $0.10 per share was paid on all shares in issue on
that date.
5 During the year ended 31 December 2021, an item of plant and machinery, costing $12000, was
sold for $3000 at a profit of $2000.
6
In the year to 31 December 2021, all interest due, $44000, has been paid.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe1a1c7c9-b295-41aa-98ed-587a7992a1e9%2Fd1659280-d3c9-4367-9ec6-d61d5cfda7d1%2Fe5tbeaw_processed.png&w=3840&q=75)
Transcribed Image Text:The statements of financial position for W Limited are as follows:
31 December
Non-current assets
Land and buildings
Cost/valuation
Accumulated depreciation
Plant and equipment
Cost
Accumulated depreciation
Current assets
Inventory
Trade receivables
Cash and cash equivalents
Total Assets
Equity and Liabilities
Ordinary share capital ($1 shares)
Share premium
Revaluation reserve
Retained earnings
Non-current liabilities
12% debenture (2030)
Current liabilities
Trade payables
Bank overdraft
Total liabilities
Total equity and liabilities
2021
$000
1150
201
949
539
326
213
1162
117
135
252
1414
600
120
80
136
936
150
86
242
328
478
1414
2020
$000
650
160
490
454
274
180
670
89
103
37
229
899
400
70
109
579
200
120
120
320
899
The following information is also available.
1
The cost of land and buildings at 31 December 2020 comprised of land $250000 and buildings
$400 000. The land, which is not depreciated, had been revalued to $330000 on 1 July 2021.
2
On 1 March 2021, a final dividend for 2020 of $0.20 per share was paid.
3
An additional 200 000 ordinary shares were issued on 1 April 2021.
4
On 1 September 2021 an interim dividend of $0.10 per share was paid on all shares in issue on
that date.
5 During the year ended 31 December 2021, an item of plant and machinery, costing $12000, was
sold for $3000 at a profit of $2000.
6
In the year to 31 December 2021, all interest due, $44000, has been paid.
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