Analysis and Report

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Part A

Cash Flow Statement


Question 1
Wood Products
Statement of cash flows
for year ended 31 March 2010
$ $ $
Cash flows from operating activities
Cash was provided from
Receipts from customers 114,620
Cash was applied to
Payments to suppliers 80,630
Payments to employees 96,800
Other operating expenses 40,150
217,580
Net cash outflow from operating activities (102,960)
Cash flows from investing activities
Cash was provided from
Sale of equipment 72,600

Cash was applied to
Purchase of fittings   6,600
Net cash inflow from investing activities 66,000
Cash flows from financing activities
Cash was provided from
Additional capital 60,500
Cash was applied to
Repayment of loan 7,700
Drawings 58,300
66,000
Net cash outflow from financing activities (5,500)

Net decrease in cash held (42,460)
Add cash at 1 April 2009 14,520
Balance of cash at 31 March 2010 (27,940)


Question 2

2.1 Discuss the purpose of the Cash Flow Statement report.

The purpose of the cash flow statement is to provide information about the cash receipts and cash payments of a business during the reporting period.   It summarises how much cash a business collects and how much cash they pay out.   It measures a business’s financial health by reconciling the changes in the business’s cash (or bank) balance for the period, showing whether or not there is enough cash flowing through the business to enable it to survive.   The cash flow statement also explains the relationship the income statement prepared under accrual accounting and the actual movement in cash from operations, by reconciling the operating cash flows with the reported profit or loss after taxation shown in the income statement (Smart, Awan, & Bourke, 2008, p. 126).

2.2... [continues]

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