THE INSTITUTE OF FINANCE MANAGEMENT (IFM)

IAS 7: STATEMENT OF CASH FLOWS

FORMAT AND REVIEW QUESTIONS OF IAS 7

Format for Statement of cash flows (Indirect Method)

Cash flow from operating activities TZS TZS

Net profit from operating activities (PBIT) XX
Adjustments of Non-cash items
-Depreciation xx
-Profit/Loss on sale of NCA (xx)/xx
-Provision increase/decrease xx/(xx) XX
Operating profit before working capital movements XX
Increase/decrease in inventories (xx)/xx
Increase/decrease in receivables (xx)/xx
Increase/decrease in payables xx/(xx) XX
Cash generated from operations XX
Tax paid (xx)
Interest paid (xx)
Dividend paid (xx) (XX)
Net cashflow from operating activities XX
Cash flow from Investing activities
Purchases of NCA (xx)
Proceeds from sale of NCA xx
Proceeds from government grants xx
Investment income received (Dividend/Interest) xx
Net cashflow from investing activities XX
Cash flow from financing activities
Issue of shares xx
Redemption of shares (xx)
Loan/debenture/bonds xx
Redemption of loan/debenture/bonds (xx) XX
Net cash flow from financing activities XX
Net increase/decrease in cash and cash equivalent XX
Cash and cash equivalent at beginning of the period xx
Cash and cash equivalent at the end of the period XX

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 Format for Statement of cash flows (Direct Method)

Cash flow from operating activities TZS TZS

Cash received from customers xx
Cash payments to suppliers (xx)
Other cash payments xx
Cash generated from operations XX
Tax paid (xx)
Interest paid (xx)
Dividend paid (xx) (XX)
Net cashflow from operating activities XX
Cash flow from Investing activities
Purchases of NCA (xx)
Proceeds from sale of NCA xx
Proceeds from government grants xx
Investment income received (Dividend/Interest) xx
Net cashflow from investing activities XX
Cash flow from financing activities
Issue of shares xx
Redemption of shares (xx)
Loan/debenture/bonds xx
Redemption of loan/debenture/bonds (xx) XX
Net cash flow from financing activities XX
Net increase/decrease in cash and cash equivalent XX
Cash and cash equivalent at beginning of the period xx
Cash and cash equivalent at the end of the period XX

Analysis of cash and cash equivalents

This year Last Year
Tshs Tshs
Cash on hand and balances with banks x x
Short-term investments x x
Cash and cash equivalents x x

Points to note
It is important to understand why certain items are added and others subtracted. Not the following points
✓ Depreciation is not a cash expense, but is deducted in arriving at profit. It makes sense, therefore, to
eliminate it by adding it back.
✓ By the same logic, a loss on a disposal of a non-current asset (arising through under provision of
depreciation) needs to be added back and a profit deducted.
✓ An increase in inventories means less cash –you have spent cash on buying inventory.

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✓ An increase in receivables means the company’s debtors have not paid as much and therefore there
is less cash.
✓ If we pay off payables, causing the figure to decrease, again we have less cash

Illustrative 1

The draft final accounts of Leila Ltd for the year ended 31 st December 2023 are as follows:

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31ST DECEMBER 2023

TZS “000”
Sales revenue 306,500
Cost of sales 260,000
Gross profit 46,500
Selling, general and administration expenses 14,000
Operating profit 32,500
Investment income 5,000
Net profit before Interest and Expenses 37,500
Interest expenses 4,000
Net profit before tax 33,500
Taxation 3,000
Net profit on ordinary activities after tax 30,500
Extra ordinary items
(Net insurance proceeds from flood disaster settlement) 1,800
Net profit transferred to income surplus 32,300
Less: Dividends 12,000
Net profit retained for the year 20,300

STATEMENT OF FINANCIAL POSITION AS AT 31ST DECEMBER 2023

Non-Current Assets 2023 TZS 2022 TZS “000”
“000”
Investment 25,000 25,000
PPE at cost 37,300 19,100
Accumulated depreciation of PPE (14,500) (10,600)
47,800 33,500
Current Assets
Cash 100 250
Short term investment 3,700 1,350
Accounts receivable 19,300 12,000
Inventory 10,000 19,500
TOTAL ASSETS 80,900 66,600
Shareholders equity
Stated capital 15,000 12,500
Income surplus 34,100 13,800
Net worth 49,100 26,300
Non -current Liabilities
Long term debt 14,900 10,400
Finance lease obligation 8,100
Current liabilities

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 Trade payables 2,500 18,900
Interest payables 2,300 1,000
Income tax payables 4,000 10,000
Total liabilities 31,800 40,300
Net worth and total liabilities 80,900 66,600

Additional information
1. During the year, the company acquired some new items of PPE of which items costing TZS
9,000,000 were acquired on a finance lease. An item which had cost TZS 800,000 was disposed
off for cash at a carrying value of TZS 200,000.
2. Accounts receivable at the end of the year included TZS 1,000,000 of interest receivable. During
the year interest income received amounted to TZS 2,000,000. Investment income consists of
interest income and dividend income.
3. The board of directors were not satisfied with the draft accounts for 2023 on grounds that in spite
of the profit after tax TZS 2,300,000 the position has worsened by TZS150,000. They suspect
embezzlement of cash on the part of the Financial Director.
REQUIRED:
As the financial accountant, you are required to prepare a detailed statement of cash flows in a
manner prescribed by IAS 7 (use indirect method and direct method).

Suggested Solution

STATEMENT OF CASH FLOWS AST AT 31ST DECEMBER 2023 (INDIRECT METHOD)

Cash flow from operating activities TZS TZS
Net profit from operating activities (PBIT) 32,500
Adjustments of Non-cash items
-Depreciation (W3) 4,500
Operating profit before working capital movements 37,000
Decrease in inventories (19,500 -10,000) 9,500
Increase in receivables (W4) (6,300)
Decrease in payables (18,900 -2,500) (16,400) (13,200)
Cash generated from operations 23,800
Interest paid (W6) (2,700)
Tax paid (W7) (9,000)
Dividend paid (12,000)
Proceeds from flood disaster settlement 1,800 (21,900)
Net cashflow from operating activities 1,900
Cash flow from Investing activities
Purchases of NCA (W2) (10,000)
Proceeds from sale of NCA 200
Interest income received 2,000
Dividend income received 2,000
Net cashflow from investing activities (5,800)
Cash flow from financing activities
Issue of shares (15,000-12,500) 2,500
Loan proceeds (14.900-10,400) 4,500
Payment for lease (9,000-8,100) (900)
Net cash flow from financing activities 6,100
Net increase/decrease in cash and cash equivalent 2,200
Cash and cash equivalent at beginning of the period 1,600
Cash and cash equivalent at the end of the period 3,800

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Workings

W1: Net increase/decrease of cash and cash equivalent

Closing cash =8,800

Opening cash =(1,600)

Net increase = 2,200

W2: Purchase on NCA

PPE A/C

Balance B/d 19,100 Cost of disposal 800

Finance Lease 9,000

Purchases (Bal figure) 10,000 Bal C/d 37,300

38,100 38,100

W3: Depreciation workings

Accumulated Depreciation
Acc dep of sold assets (800-200) 600 Bal B/d 10,600
Depreciation (Bal.) 4,500
Bal C/d 14,500
15,100 15,100

W 4: Receivable Movement

Accounts Receivable
Balance B/d 12,000
Interest receivable 1,000
Receivable movement 6,300 Balance C/d 19,300
19,300 19,300

W5: Investment income

Balance = 5,000

Interest income received = (2,000)

Interest receivable =(1,000)

Dividend (Balancing) =2,000

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W 6: Interest paid

Interest payable
Interest paid (cash) 2,700 Balance B/d 1,000
P&L 4,000
Balance C/d 2,300
5,000 5,000

W 7: Tax paid

Tax payable
Interest paid (cash) 9,000 Balance B/d 10,000
P&L 3,000
Balance C/d 4,000
13,000 13,000

STATEMENT OF CASH FLOWS AST AT 31ST DECEMBER 2023 (DIRECT METHOD)

Cash flow from operating activities TZS TZS
Cash received from customers (W1) 300,200
Cash paid to suppliers and employees (W2)
Cash generated from operations 23,800
Interest paid (W3) (2,700)
Tax paid (W4) (9,000)
Dividend paid (12,000)
Proceeds from flood disaster settlement 1,800 (21,900)
Net cashflow from operating activities 1,900
Cash flow from Investing activities
Purchases of NCA (W5) (10,000)
Proceeds from sale of NCA 200
Interest income received 2,000
Dividend income received 2,000
Net cashflow from investing activities (5,800)
Cash flow from financing activities
Issue of shares (15,000-12,500) 2,500
Loan proceeds (14.900-10,400) 4,500
Payment for lease (9,000-8,100) (900)
Net cash flow from financing activities 6,100
Net increase/decrease in cash and cash equivalent 2,200
Cash and cash equivalent at beginning of the period 1,600
Cash and cash equivalent at the end of the period 3,800

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Workings

Working 1: Cash received from customers

Receivable control account

Bal b/d 12,000 Cash received (Bal figure) 300,200

Interest receivable 1,000 Bal c/d 19,300

Sales (P&L) 306,500

319,500 319,500

Payable control account

Cash paid (bal figure) 276,400 Bal b/d 18,900

Purchases 250,500

Bal c/d 2,500 General expenses 9,500

278,900 278,900

✓ Purchases = Cost of sales +Closing inventory -Opening inventory =260,000+10,000-

19,500=250,500
✓ General expenses = Selling, general and administration expenses – Depreciation (non-cash)
14,000 - 4,500 =9,500

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 PRACTICE QUESTIONS
QUESTION 1
The statement of profit or loss for Mudunku Ltd .appears as follows;
31.12.2022 31.12.2023
TZS. TZS
Sales 2,004,800 3,485,000
Cost of sales 1,432,000 2,788,000
Gross profit (i) 572,800 697,000
Expenses:
Salaries 157,200 172,400
Rent 24,000 24,000
Advertising 13,000 18,000
Bad debts 2,000 6,000
Other expenses 62,200 61,000
Depreciation 90,400 70,160
Loss on disposal of vehicle – 9,440
Total expenses (ii) 348, 800 361,000
Net profit for the year (i)- (ii) 224,000 336,000
Taxation (112,000) (168,000)
Dividends (60,000) (120,000)
Profit b/f 74,000 126,000
126,000 174,000

The statement of financial position of the company appear as follows:

Current Assets: 31.12. 2022 31.12.2023
Current Assets: TZS. TZS
Stock in trade 113,000 232,400
Trade debtors (net) 136,400 191,600
Prepayments - 24,000
Cash 23,000 6,600
Total current assets (i) 272,400 454,600
Less: Current Liabilities
Trade creditors 77,000 93,600
Accrued expenses 3,600
Tax payable 42,400 30,000
Dividends payable 25,000 33,000
Bank overdraft – 56,000
Total current Liabilities (ii) 148,000 212,600
Net current assets (i)-(ii) 124,400 242,000
Fixed Assets 361,600 338,000
486,000 580,000
FINANCED BY:
Ordinary Share Capital 300,000 360,000
Share Premium Account – 6,000
Profit and Loss Account 126,000 174,000
Long term loan 60,000 40,000
486,000 580,000

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It has been ascertained that a vehicle acquired at a cost of TZS120,000 on April 1 2021 and depreciated
at 20% p.a on reducing balance basis has been disposed off on June 30 th 2023 for TZS. 64,000.
Required
Prepare the statement of cash flow by
a) Direct Method
b) Indirect Method

QUESTION 2
Mlay E Enterprises statement of financial position as at 31 December (Figures are in TZS ‘000’)
2022 2023
TZS TZS
Non-current assets at cost 5,600 8,300
Less Acc.Depreciation (2,300) (3,150)
3,300 5,150
Purchase of subsidiary co. (31.12.218) 1,000
Current Assets:
Stock 7,204 4,516
Debtors 3,120 3,994
Provision for Bad debts (210) (180)
2910 3814
Cash 60 90
10,174 8,420
Less: Current Liabilities
Creditors 1,520 1,416
Taxation 580 735
Proposed dividend 800 1,200
Bank overdraft 105 629
(3005) (3,980)
10,469 10,590
Financed by:
Issued share capital 4,000 5,000
Share premium account – 1,000
Profit and loss account 3,469 4,090
Loan 3,000 500
10,469 10,590

Mlay E Enterprises Profit and Loss Account for the year ended 31 December 2023
TZS‘000’
Profit on ordinary activities before taxation* 2,536
Interest received on loan 120
2,656
Interest paid (100)
Profit on ordinary activities before tax 2,556
Tax on ordinary activities (735)
1,821
Undistributed profit from last year (retained profit b/d) 3,469

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 5,290
Proposed dividend 1,200
Retained profit c/d (undistributed profits carried forward to next year 4,090
Additional Information:
1. Profit before tax on non- current asset sold of TZS 85,000. The items sold had a cost TZS
1,120,000 had depreciated at TZS 740,000 and were sold for TZS 465,000
2. 1,000 ordinary shares of TZS1 were issued at TZS 2
3. Below is the analysis of the cash book
Cash received from customers 91,900,000
Cash paid to suppliers (62,080,000)
Cash paid to and on behalf of employees (22,600,000)
Less increase in stock (1,436,000)
Other cash payments (499,000)
Net cash inflow operating activities 5,721,000
Required
From the information above that relate to Mlay E enterprise prepare the statement of cash flow for the
year ended 31st December 2023 by using direct method and reconcile the cash from operating activities
by using indirect method

QUESTION 3
Kane company’s statement of profit or loss and other comprehensive income for the year ended 31
December 2022 and statements of financial position at 31 December 2021 and 31 December 2022
were as follows:
Kane Cos statement of profit or loss as at 31 December 2022
$000 $000
Sales 720
Raw material consumed 70
Staff costs 94
Depreciation 118
Loss on disposal of long term asset 18
300
420
Interest payable 28
Profit before tax 392
Income tax expense 124
Profit for the year 268

Kane Cos Statement of Financial Position as At 31 December

2022 2021
$000 $000 $000 $000
Assets
Property plant and equipment
Cost 1596 1560
Depreciation 318 224
1278 1336
Current assets
Inventory 24 20

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Trade receivables 76 58
Bank 48 56
148 134
Total assets 1426 1470
Equity and liabilities
Equity
Share capital 360 340
Share premium 36 24
Retained earnings 686 490
1082 854
Non-current liabilities
Long term loans 200 500
Current liabilities
Trade payables 42 30
Taxation 102 86
144 116
1426 1470
During the year, the company paid $90,000 for new piece of machinery
Required
Prepare a statement of cash flows for Kane Co for the year ended 31 December 2022 in accordance
with the requirements of IAS 7, using indirect method

QUESTION 4
Oakview limited is involved in the manufacture of soups and its financial statements are as follows:
Oakview Limited Statement of Financial Position as at 31 December 2023
2023 2022
€ ’000 €’000
Non-Current Assets
Property, Plant & equipment 1,942 1,628
Total Non-Current Assets 1,942 1,628
Current Assets
Inventories 196 129
Trade receivables 187 199
Cash & Cash equivalents 53 54
Total Current Assets 436 382
Total Assets 2,378 2,010
Equity & Liabilities
Equity
Share Capital 140 100
Share Premium 45 45
Retained earnings 1,499 1,014
Revaluation surplus 48 26
Total Equity 1,732 1,185
Non-Current Liabilities
Long Term loan 512 646
Total non-Current liabilities 512 646
Current Liabilities
Trade Payables 115 146
Bank overdraft - 12
Current Tax Payables 19 21
Total Current Liabilities 134 179
Total Equity & Liabilities 2,378 2,010

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Oakview Limited Statement of Profit or Loss & Other Comprehensive Income for the year-ended
31 December 2023
€’000
Revenue 3,658
Cost of sales (2,672)
Gross Profit 986
Distribution Costs (169)
Administration expenses (157)
Finance Costs (34)
Profit before Tax 626
Income Tax expense (95)
Profit for the Year 531
Other Comprehensive Income
Gain on Property revaluations 22
Other Comprehensive Income for the year, net of tax 22
Total Comprehensive Income for the year, net of tax 553
Notes:
(i) Property, Plant & equipment with a carrying value of €200,000 was sold for €180,000. This
asset had originally cost €250,000.
(ii) Depreciation of Property, Plant & equipment during the year amounted to €98,000.
(iii) Dividends paid during the year amounted to €46,000 and are reported in the statement of
Changes in equity.
Required
Prepare a statement of Cash flows for the year-ended 31st December 2023 for Oakview Limited in
accordance with IAS 7 - Statement of Cash Flows.

QUESTION 5
Skelug limited is involved in the manufacture of concrete products and its financial statements are as
follows:
Skelug Limited Statement of Profit or Loss & Other Comprehensive Income for the year-ended
31 December 2023
€’000
Revenue 4,300
Cost of sales (3,600)
Gross Profit 700
Distribution Costs (176)
Administration expenses (124)
Finance Costs (42)
Profit before Tax 358
Income Tax expense (46)
Profit for the Year 312
Other Comprehensive Income
Losses on Property revaluations, net of tax (46)
Total Comprehensive Income for the year, net of tax 266

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Skelug Limited Statement of Financial Position as at 31 December 2023
2023 2022
€’000 €’000
Non-Current Assets
Property, Plant & equipment 1,830 1,461
Total Non-Current Assets 1,830 1,461
Current Assets
Inventories 262 289
Trade receivables 161 146
Cash & Cash equivalents 98 81
Total Current Assets 521 516
Total Assets 2,351 1,977
Equity & Liabilities
Equity
Share Capital 300 200
Share Premium 50 20
Retained earnings 1,451 1,277
Revaluation surplus 74 120
Total Equity 1,875 1,617
Non-Current Liabilities
Long Term loan 280 200
Total Non-Current Liabilities 280 200
Current Liabilities
Trade Payables 148 116
Bank overdraft 10 18
Current Tax Payables 38 26
Total Current Liabilities 196 160
Total Equity & Liabilities 2,351 1,977
Notes:
(i) Property, Plant & equipment with a carrying value of €320,000 was sold for €280,000. This
asset had originally cost €450,000.
(ii) Depreciation of Property, Plant & equipment during the year amounted to €356,000.
(iii) Dividends paid during the year amounted to €138,000 and are reported in the statement of
Changes in equity.
Required
Prepare a statement of Cash flows for the year-ended 31 December 2023 for Skelug Limited in
accordance with IAS 7 Statement of Cash Flows.

QUESTION 6
Franfie Limited is involved in the service industry and its financial statements are as follows:
Franfie Limited Statement of Financial Position as at 31 December 2023
2023 2022
€ ’000 €’000
Non-Current Assets
Property, Plant and Equipment 2,850 2,050
Total Non-Current Assets 2,850 2,050
Current Assets

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Inventories 580 600
Trade Receivables 420 300
Cash and Cash Equivalents 30 50
Total Current Assets 1,030 950
Total Assets 3,880 3,000
Equity & Liabilities
Equity
Share Capital 1,100 900
Share Premium 200 100
Retained Earnings 980 610
Revaluation Surplus 300 100
Total Equity 2,580 1,710
Non-Current Liabilities
Long-Term Loan 950 800
Total Non-Current Liabilities 950 800
Current Liabilities
Trade Payables 290 320
Bank Overdraft 20 120
Current Tax Payables 40 50
Total Current Liabilities 350 490
Total Equity and Liabilities 3,880 3,000

Franfie Limited Statement of Profit or Loss & Other Comprehensive Income for the year-ended
31 December 2023
€’000
Revenue 11,700
Cost of Sales (10,400)
Gross Profit 1,300
Distribution Costs (520)
Administration Expenses (250)
Finance Costs (50)
Profit before Tax 480
Income Tax Expense (60)
Profit for the Year 420
Other Comprehensive Income
Gains on Property Revaluations 200
Other Comprehensive Income for the year, net of tax 200
Total Comprehensive Income for the year, net of tax 620
Notes:
(i) Property, Plant & Equipment with a carrying value of €280,000 was sold during 2023 for
€290,000. This asset had originally cost €450,000.
(ii) Depreciation of Property, Plant & Equipment during 2023 amounted to €400,000.
(iii) Dividends paid during 2023 amounted to €50,000 and are reported in the Statement of Changes
in Equity.
Required:
Prepare a Statement of Cash Flows for the year-ended 31 December 2023 for Franfie Limited in
accordance with IAS 7 - Statement of Cash Flows.

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QUESTION 7
Kingdom is a public listed manufacturing company. Its draft summarized financial statements for the year
ended 30 September 2023 (and 2022 comparatives) are:
Statements of profit or loss and other comprehensive income for the year ended 30 September:
2023 2022
$’000 $’000
Revenue 44,900 44,000
Cost of sales (31,300) (29,000)
Gross profit 13,600 15,000
Distribution costs (2,400) (2,100)
Administrative expenses (7,850) (5,900)
Investment properties – rentals received 350 400
– fair value changes (700) 500
Finance costs (600) (600)
Profit before taxation 2,400 7,300
Income tax (600) (1,700)
Profit for the year 1,800 5,600
Other comprehensive income (1,300) 1,000
Total comprehensive income 500 6,600

Statements of financial position as at 30 September:

2023 2022
$’000 $’000 $’000 $’000
Assets
Non-current assets
Property, plant and equipment 26,700 25,200
Investment properties 4,100 30,800 5,000 30,200
Current assets
Inventory 2,300 3,100
Trade receivables 3,000 3,400
Bank NIL 5,300 300 6,800
Total assets 36,100 37,000
Equity and liabilities
Equity
Equity shares of $1 each 17,200 15,000
Revaluation reserve 1,200 2,500
Retained earnings 7,700 26,100 8,700 26,200
Non-current liabilities
12% loan notes 5,000 5,000
Current liabilities
Trade payables 4,200 3,900
Accrued finance costs 100 50
Bank 200 NIL
Current tax payable 500 5,000 1,850 5,800
Total equity and liabilities 36,100 37,000

The following information is relevant:

– On 1 July 2023, Kingdom acquired a new investment property at a cost of $1·4 million. On this date,
it also transferred one of its other investment properties to property, plant and equipment at its fair
value of $1·6 million as it became owner-occupied on that date. Kingdom adopts the fair value model
for its investment properties.

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– Kingdom also has a policy of revaluing its other properties (included as property, plant and
equipment) to market value at the end of each year. Other comprehensive income and the revaluation
reserve both relate to these properties.
– Depreciation of property, plant and equipment during the year was $1·5 million. An item of plant with
a carrying amount of $2·3 million was sold for $1·8 million during September 2023.

Required: Prepare the statement of cash flows for Kingdom for the year ended 30 September 2023 in
accordance with IAS 7 Statement of Cash Flows using the indirect method.

QUESTION 8
The Statement of Financial Position of PAMBA plc as at 31st July 2022 (with comparatives for the
previous year) is shown below:

2022 2021
TZS. (000) TZS. (000)
Assets
Non-current assets
Property, plant and equipment at cost 490,000 450,000
Less: Accumulated depreciation 370,000 330,000
120,000 120,000
Investments at cost 19,000 44,000
Total Non-current Assets 139,000 164,000
Current assets
Trade receivables 231,000 106,000
Less: Allowance for doubtful debts 26,000 4,000
205,000 102,000
Inventories 289,000 176,000
Prepayments 13,000 12,000
Cash on 7-day deposit - 50,000
Cash at bank and in hand - 59,000
Total Current Assets 507,000 399,000
Total Assets 646,000 563,000
Equity
Ordinary share capital 230,000 180,000
Preference share capital 20,000 20,000
Share premium account 30,000 -
Retained earnings 158,000 213,000
438,000 413,000
Liabilities
Non-current liabilities
14% Debenture stock - 40,000
12% Debenture stock 30,000 -
Current liabilities
14% Debenture stock 40,000 -
Trade payables 60,000 55,000
Accruals 9,000 8,000
Amount owing on non-current assets 20,000 -
Taxation 9,000 47,000
Bank overdraft 40,000 -
178,000 110,000
646,000 563,000

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The following additional information is also available:
(i) Equipment which had cost TZS.30,000,000 during the year to 31st July 2019 was sold in
February 2022 for TZS.10,000,000. 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 (some of
the equipment were over five years old on 31st July 2022).

(ii) Non-current asset investments which had cost TZS.25,000,000 some years previously were
sold during the year for TZS.21,000,000.

(iii) Dividends received during the year were TZS.5,000,000. Dividends totaling TZS.100,000,000
were paid during the year.

(iv) The 14% debentures were issued many years ago and are due to be redeemed on 1 st January
2023. A fresh issue of 12% debentures was made on 31st July 2022.

(v) Interest paid during the year (including debenture interest) was TZS.8,000,000. All interest
was paid on the due date and no interest was accrued at either the start or the end of the year.
No interest was received during the year.

(vi) Taxation shown as a liability on 31st July 2021 was paid during the year to 31 st July 2022 at
the amount stated.

(vii) In January 2022, the company issued 50,000 TZS.1,000 ordinary shares at a premium of
TZS.600 per share.

(viii) The cash on 7-day deposit ranks as a cash equivalent.

REQUIRED:
(a) Calculate the company’s profit before tax for the year to 31st July, 2022.
(b) Prepare a Statement of Cash Flows for the year ended 31st July 2022 in accordance with the
requirements of IAS 7 (using the indirect method)
(c) 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.
(d) Comment briefly on the significance of the information provided by the company’s Statement
of Cash Flows

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