1.An entity may report significant profits over a number of successive years and still experience negative net cash flows overall. Provide two reasons and explain how this is possible.

2. A companys workforce went on strike for an indefinite period commencing on 28 June 2022. The strike was expected to cause severe financial conditions for the company. The financial statements for the year ended 30 June 2022 were expected to be finalised by 3 August 2022.

Required: Analyse the above event and classify the event as either an adjusting or a non-adjusting event.

Apply relevant accounting standards to justify your classification.