QUESTION 1 (20 Marks) REQUIRED Use the information provided below to answer the following questions:

1.1 Provide a possible reason why the amount for interest expense in the Statement of Comprehensive Income is zero. (2)

1.2 Calculate the depreciation for the year ended 31 December 2021. (2)

1.3 Calculate the amount that would appear in the cash flow statement for the year ended 31 December 2021 for Profit before working capital changes. (2)

1.4 Suggest FOUR (4) control measures that you would put in place to reduce the chances of embezzlement of cash by the employees. (4)

1.5 What will be the impact on the value of inventory (in the Statement of Financial Position) and the cost of goods sold (in the Statement of Comprehensive Income) if the last-in-first-out (LIFO) method rather than the first-in-first-out (FIFO) method is used during periods of inflation? (4)

1.6 Explain THREE (3) implications of a high earnings retention ratio to the shareholders of Mobifone Limited. (6)

INFORMATION

The following information was extracted from the accounting records of Mobifone Limited on 31 December 2021, the end of the financial year: MOBIFONE LIMITED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2021 R ASSETS Non-current assets 1 700 000 Fixed/Tangible assets 1 500 000 Investments 200 000 Current assets 5 300 000 Inventories 3 400 000 Accounts receivable 1 600 000 Cash 300 000 Total assets 7 000 000 EQUITY AND LIABILITIES Equity 3 200 000 Share capital 2 300 000 Retained earnings 900 000 Non-current liabilities 1 600 000 Loan: KLM Bank (15%) 1 600 000 Current liabilities 2 200 000 Accounts payable 2 200 000 Total equity and liabilities 7 000 000

MOBIFONE LIMITED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2021 R

Sales (all credit) 17 000 000 Cost of sales (14 000 000) Gross profit 3 000 000 Operating expenses ? Depreciation ? Other selling, general and administrative expenses 1 400 000 Operating profit 1 000 000 Investment income 20 000 Interest expense 0 Profit before tax 1 020 000 Company tax (285 600) Profit after tax 734 400 QUESTION 2 (20 Marks) REQUIRED Use the information provided in QUESTION 1 to answer the following questions: 2.1 Calculate the ratios for 2021 (expressed to two decimal places) that reflect each of the followi