Question 2 a) International Accounting standards 7(IAS 7) gives two methods of preparing the cashflow Direct method and indirect method. Differentiate between the direct method and the indirect method. (5 marks) b)IAS 7 states that cashflow statement should be categorized in to Operating, Investing and financing activities. Kitwe Fabrics Ltd Company has provided the following information on selected transactions during 2019: K 150,000 Dividends paid to preference shareholders Proceeds from issuing bonds Proceeds from issuing preference shares Proceeds from sale of equipment Purchases of inventories Purchase of land by issuing bonds Purchases of treasury shares 900,000 1,050,000 450,000 1,200,000 300,000 600,000 i)State where each of the above items will be categorized when preparing the cash flow. (7 marks) ii)Calculate the net cash provided (used) by investing activities during 2019 (3 mark) iii)The net cash provided (used) by financing activities during 2019 (5 marks) Page 3 of 5 c) Your roommate is surprised that during the last year, the company in which she is a shareholder reported a net loss of K600,000, yet its cash increased to K300,000 during the same period. Explain to your roommate how this situation could occur. (5 marks) Total :25 marks ||