Question

1. In 2018, Dreaming Bhd planned to apply for a 10-year loan from Buffalo Bank in 2019 for an amount of RM1.5 million. Does Dreaming Bhd need to report this loan as a non-current liability in the Balance Sheet as at 31 December 2018? (Your answer need to be based on the accounting definition of a liability). (4 points)
2. What information does the statement of cash flow provide that is not available from the balance sheet or the income statement? (3 points)
3. The following information relates to Avenger Trading Enterprise.

Net sales	200,000
Closing inventory	44,000
Opening inventory	54,000
Purchases inventory	130,000
Rent expense Depreciation Purchase of computer Salary expense Cash in hand	2,000 1,500 5,000 3,500 4,500

Please compute:

i) Cost of sales; ii) Gross profit; and iii) Net profit/loss (4 points) [show your working clearly]

Answer 1

1. This should be Reported as Non Current Liability. Any Liability can be considered as Current liability once when any liability is to be repaid within 12 Months.

2. The Cash flow statement shows the cash used/from the operating , investing and finacing activities

3i)

Opening inventory	54,000.00
Purchases inventory	130,000.00
Closing inventory	-   44,000.00
Cost of sales;	140,000.00

3ii)

Sales	200,000.00
Cost of sales;	140,000.00
Gross Profit	60,000.00

3iii)

Sales	200,000.00
Gross Profit	140,000.00
Gross Profit	60,000.00
Rent Expense	2,000.00
Depreciation	1,500.00
Salary Expense	3,500.00
Net Profit/Loss	53,000.00