Moletji Ltd is public company owned by two prominent business women and the local community trust around the Capricorn District Municipality. The company was founded in the year 2018 and the following information pertains to the company: Extract of accounts pertaining to the statement of financial position as at 31 December: 2020 2019 R R Long-term loan 112 500 89 100 Loans to directors 47 900 13 800 Loans from shareholders 11 100 34 100 Trade payables control 59 900 48 000 Accrued security expense 7 100 1 800 Land and buildings at cost 758 700 615 500 Vehicles at cost 267 100 130 100 Furniture at cost 86 000 71 300 Investments at fair value 168 700 Accumulated depreciation: Vehicles 62 600 47 600 Accumulated depreciation: Furniture 15 700 13 300 Share capital: ordinary shares 515 200 266 800 Share capital: 12% preference shares 265 500 177 900 Retained earnings 484 100 370 400 Inventory 115 700 77 200 Dividends payable 46 900 14 900 Dividends receivable 3 000 2 500 SARS (income tax) 46 900 Dr 103 800 Trade receivables control 66 400 77 900 Prepaid expenses (advertising) 7 900 5 500 Bank 37 600 2 100 Items disclosed in the statement of profit or loss and other comprehensive income for the year ended 31 December 2020: Revenue Cost of sales Profit on sale of non-current assets: furniture Loss on sale on listed investments Dividend income: listed investments Fair value gain: listed investments Other operating expenses Administrative expenses (including salaries and wages) Depreciation Loss on sale of non-current asset: vehicle Interest expense Income tax expense Profit for the year R 2 107 300 780 500 900 3 600 8 900 14 900 140 600 161 700 51 500 12 100 11 500 232 100 597 600 Additional information: 1. The following relates to property, plant and equipment: On 31 October 2020, a vehicle with a cost price of R71 000 and accumulated depreciation of R50 000 (on 1 January 2020) was sold for cash. A replacement vehicle was bought on 1 December 2020. On 20 June 2020, furniture with a cost price of R4 000 and accumulated depreciation of R1 200 was sold for cash. A replacement furniture was bought on 31 July 2020. All other purchases were in cash. 2. It is the accounting policy of the company to provide for depreciation as follows: Vehicles: According to the diminishing balance method, at 20% per annum. Furniture: According to the straight-line method, at 25% per annum. 3. The following relates to the shares of the company: On 31 August 2020, the shareholders approved the capitalisation issue of one (1) ordinary share for every four (4) ordinary shares held. On that date the number of ordinary shares issued were 98 000 shares. The capitalisation issue was done from retained earnings at R0,50 per share. All other issued shares were paid for in cash. The company allotted and issued 45 000 ordinary shares and 12% preference shares on 31 October 2020. On 15 December 2020, the company declared an ordinary dividend of 30 cents per share. 4. The investments consist of listed shares in Mankweng Ltd, bought for R3 each on 1 January 2020. The company sold 4 000 of these shares on 30 November 2020. 5. The following relates to loans for the company: Interest on long-term loans is capitalised. Loans to directors are interest free and immediately callable. Loans from shareholders are interest free and repayable on 30 November 2022 QUESTION 31 Which of the following statements is correct relating to preparation of statement of cash flows? O A. Statement of cash flows must only be prepared using the indirect method. . O B. Partnerships are not allowed to prepare a statement of cash flows. O C. Statement of cash flows is prepared according to the accrual basis of accounting D. Statement of cash flows shows only the investing activities of a business. O E. Statement of cash flows is prepared according to cash basis of accounting. Reset Selection Question 32 of 32 2.5 Points QUESTION 32 Which of the following statements is incorrect relating to preparation of statement of cash flows? O A. Capitalisation share issue is regarded as a cash item. B. Interest paid is a separately disclosable item. O C. Depreciation is a non-cash item. O D. Dividends received is a separately disclosable item. O E. Loss on sale of equipment is a non-cash item. Reset Selection