Tiffany established The Marketing Store, an Instagram management business on 1 January 2024 as a sole trader business. She contributed $10 000 in cash to the business and did not withdraw funds for the year.

For the year ended 31 December 2024, the following events occurred in the business:

1. Received $58 000 cash for marketing services provided.

2. Paid cash expenses of $15 000 for business supplies and website development.

3. At the end of the year, the business purchased a new computer for $1200 cash.

4. The business leases premises as an office. Lease rental payments for the year amounted to $14 000.

5. The business borrowed $25  000 to support it national expansion.

Required

(a) Prepare a statement of financial performance for The Marketing Store for the year ended 31 December 2024.

(b) Prepare a statement of cash flows for The Marketing Store for the year ended 31 December 2024.

(c) Discuss if a business can operate profitably and still have a net cash outflow for the year.

(d) Provide a counter argument to the statement that ‘a better indicator of business performance is cash flow’.