FINANCIAL REPORTING

MCOM 3rd SEMESTER

TOTAL MARKS 50
TIME ALLOWED 2 HOURS
Q1. You have been given the following information relating to a limited liability company called
Abdullah and Co. This company is preparing financial statements for the year ended 31 May 2020.

STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED 31 MAY 2020

RS.'000
Revenue 66,600
Cost of sales (13,785)
Gross profit 52,815
Distribution costs (7,530)
Administrative expenses (2,516)
Investment income 146
Finance cost (1,177)
Profit before tax 41,738
Tax (9,857)
Profit for the year 31,881
Retained earnings brought forward at 1 June 2019 28,063
Retained earnings carried forward at 31 May 2020 59,944
STATEMENTS OF FINANCIAL POSITION AS AT 31 MAY
2020 2019
RS. 000 RS.000
Assets
Non-current assets
Cost 144,844 114,785
Accumulated depreciation (27,433) (26,319)
117,411 88,466
Current assets
Inventory 24,931 24,065
Trade receivables 18,922 13,238
Cash 3,689 2,224
47,542 39,527
Total assets 164,953 127,993
Equity and liabilities
Equity
Ordinary share capital 27,000 23,331
Share premium 14,569 10,788
Revaluation surplus 15,395 7,123
Retained earnings 59,944 28,063
Noncurrent liabilities 116,908 69,305
6% loan note 17,824 24,068
Current liabilities
Bank overdraft 5,533 6,973
Trade payables 16,699 20,324
Taxation 7,989 7,323
30,221 34,620
Total equity and liabilities 164,953 127,993

Additional information
During the year ended 31 May 2020, the company sold a piece of equipment for
Rs.3,053,000, realizing a profit of Rs.1,540,000. There were no other disposals of non-
current assets during the year.
Depreciation of Rs.5,862,000 has been charged.
There were no amounts outstanding in respect of interest payable or receivable as at 31
May 2019 or 2020.
There were no dividends paid or declared during the year.
Based on the above information

Q1. Prepare cash flow from operating activity 15 marks

Q2. Cash flow from investing Activity 10 Marks

Q3 Cash flow from financing activity 10 marks

Q4.

Define components of financial statements in lights of IAS 1 in detail including purpose and basis
of preparing each components. (10 Marks)

Q5s.

Define format of each component allowed by IAS 1 with illustrative example. (5 Marks)