Apple Valley Orchard had the following cash transactions over the financial year ending 30 June 2023. Opening cash balance, 1 July 2022, was $5,000.

Transaction Amount Acquisition of building $575,000 Received loan funds $150,000 Payment to employees $92,000 Income Tax paid $5,000 Sold machinery $220,000 Drawings $6,000 Paid bank interest $1,500 Paid suppliers $50,000 Cash sales $140,000

Required:

Prepare a Cash Flow Statement for Apple Valley Orchard for the year ending 30 June 2023 using the information provided. [6 marks] Explain why purchases made on credit terms are not included in the Cashflow Statement. Your answer should include an explanation of the difference between accrual and cash accounting (max 300 words). [5 marks]

Explain whether this business could possibly have a profit in the Income Statement. Explain your answer by providing an example. (max 300 words).