Question 2. (a) (Continued)

· There were no disposals of equipment during the year.

· The ordinary shares were issued for cash.

· There was a RM480,000 debit to Retained Earnings for cash dividends declared.

Required:

Prepare a statement of cash flows for the year ended 31 December 2019 using the indirect method.        

(b) Explain how the statement of cash flows can provide useful additional information to the users of financial statements.                  

Q3. (a) Syarikat Ceria has a cash balance of RM25,000 at the beginning of August.

Additional information:

· Credit sales are settled as follows: 30% in the month of sale, 50% in the next month and 18% in the following month. The balance represents bad debts.

· Creditors give 1-month credit for payment.

· Salaries are paid in the current month.

· Fixed costs are paid 1 month in arrears and include a charge for depreciation of RM3,000 per month.

Question 3. (a) (Continued)

Required:

Prepare a cash budget for the month of October, November and December.

(b) Differentiate between absorption costing and marginal costing.

(c) A cost-volume-profit (CVP) income statement is frequently prepared for internal use by management. Describe the features of the CVP income statement that make it more useful for management decision-making than the traditional income statement (i.e. Statement of Profit or Loss) that is prepared for external users.

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