( 10:12 Read Only - You can't save changes to this file. you are asked to expram the advantages ortho method and How It affects Save a copy (ii) Also, calculate the Net profit using FIFO method of Valuation of Inventory. (12 marks) Question 2: Cloud Ltd's Income Statement for the year ended 31st Dec 2020 and the Statement of Financial Position as at 31st December 2020 and 2019 are as follows: Income Statement for the year ended 31 Dec 2020 Sales Cost of sales Gross profit Distribution expenses Administrative expenses (it included depreciation of $118.5m) Operating profit Interest payable Profit before taxation Taxation Profit for the year Statement of financial position as at 31 December 2020 and 2019 Non-current assets Plant, plant, and Equipment Current assets Inventories Trade receivables Cash at bank Total assets $ Million 864 (342) 522 (40.5) (157.5) (34.5) 289.5 (69) 220.5 2020 2019 $ Million $ Million # # 697 673 B B H H 61.5 66 208.5 181.5 102.5 50 1,069.5 970.5 Intermediate Accounting-1-END-OF SEMESTER EXAM-FALL 2020 Page-41 Equity and liabilities 12 Share capital Retained earnings 360 225 184.5 39 B # R Non-Current liabilities Loan 1 B 375 600 B Current liabilities Trade payables Taxation Total Equity and Liabilities 81 82.5 69 24 1069.5 970.5 During 2020, Company purchased some plant and machinery but there were no disposal of Non-Current assets. A dividend of RO 75 million was paid on ordinary shares during the year. The interest paid during the year is equal to the payable expenses shown in the Income statement. 1. Prepare a cash flow statement of Cloud Ltd for the year ended 31st Dec 2020 (show all your workings). 2. Discuss the crucial importance of preparing cash flow statement... (20 Marks)