SECTION A: FINANCIAL ACCOUNTING ANSWER ONE QUESTION ONLY Type your answers the answer booklet provided QUESTION 1 (20 marks) Freshly Ltd Cash Flow Statement for the year onded 31 January 2020 Cashflows from operating activities Operating profit 40,000 Add: depreciation T 5 ,000 Working capital movements Less: increase in inventories Less: increase in trade receivables Less decrease in trade payables Cash flows from operating activities (100,000) (40,000) (125,500) Less tax paid Net cash inflow from operating activities (5,000) (130,500) Cashflows from investing activities Purchase of equipment Sale of lorry Interest received Net cash outflow from investing activities (20,000) 10,500 1,000 (8,500) Cashflows from financing activities loan interest paid Dividend payment Net cash inflow from financing activities 50,000 (3.000) (20.000) 27,000 Net decrease in cash Cash balance at 1February 2019 Cash balance at31th January 2020 (112.000) 30,000 (82,000) Using the six headings in the table below explain to the owner of Freshly Ltd. why the cash balance has decreased by commenting on the following areas of the Cash Flow statement. Try to link areas of the Cash Flow Statement to each other, (20 marks) 1a) Movement in cash balances 1b) Cash flows from operating activities 10) Working capital movements 1d) Cash flows from invesing activities 1e) Cash flows from financing activities 1f) Overall summary 2 marks 3 marks 5 marks 4 marks 4 marks 2 marks