FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Consider the following information from the Income Statement of Production Ltd. on 31st December 2022 (accounting
year-end): Operating profit equals £30,000 and depreciation expense equals £2,000. In addition, consider the following
information from the Statement of Financial Position of Production Ltd.:
Trade Receivables
Trade Payables
31st December 2021 31st December 2022
£
£
2,500
9,000
32,000
12,000
Additional information:
• Tax paid on cash during the current accounting year amounts to £12,500
• Gain on asset disposal equals £1,000.
Considering all the previous information from Production Ltd., which of the following statements is true on 31st December
2022?
O a. Production Ltd. shows a negative net cash flow from operating activities which equals -£8,000.
O b. Production Ltd. shows a positive net cash flow from operating activities which equals £3,000.
O c. The net cash flow from operating activities equals £0
O d. None of the answers is true.
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Transcribed Image Text:Consider the following information from the Income Statement of Production Ltd. on 31st December 2022 (accounting year-end): Operating profit equals £30,000 and depreciation expense equals £2,000. In addition, consider the following information from the Statement of Financial Position of Production Ltd.: Trade Receivables Trade Payables 31st December 2021 31st December 2022 £ £ 2,500 9,000 32,000 12,000 Additional information: • Tax paid on cash during the current accounting year amounts to £12,500 • Gain on asset disposal equals £1,000. Considering all the previous information from Production Ltd., which of the following statements is true on 31st December 2022? O a. Production Ltd. shows a negative net cash flow from operating activities which equals -£8,000. O b. Production Ltd. shows a positive net cash flow from operating activities which equals £3,000. O c. The net cash flow from operating activities equals £0 O d. None of the answers is true.
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