Question 1 A company had the following items on its statements of financial position at the end of year 1 and year 2. Inventories Accounts receivables Accounts payables Wage payables Interest payables Year 1 (Amount in ) Year 2 (Amount in E) 21,000 25,000 28,000 33,000 23,000 20,000 2,000 3,500 4,500 2,000 In addition, the statement of comprehensive income for year 2 included the following items: Particulars Amount () Amount () 90,000 Gross profits Less: General expenses Wage expenses Depreciation expenses on plant 13,000 9,000 21,000 (43,000) Operating profits 47,000 Interest income 3,000 Interest expense (6,000) Gain on disposal of plant 4,000 Profit before taxes 48,000 a) You are required to calculate the cash flow generated from operating activities during year 2. [11 marks] b) Elaborate the criteria on classifying whether stock investments are regarded as "Cash and cash equivalent". [4 marks] Total marks for Question 1 [15 marks) See Next Page