Question 40)

Part A

On 1/3/2021, Diafimisi Limited entered into a six-month advertising contract by paying $22,500 on that date.

State, to the nearest whole dollar, the cash outflow arising from this event for the year ended 30 June 2021

Part B

Daneistis Limited provides the following loan schedule in relation to its borrowings:

Date	Payment ($)	Interest ($)	Principal ($)	Balance ($)
30 June 2020				749,950
30 June 2021	113,700	33,748	79,952	669,998
30 June 2022	113,700	30,150	83,550	586,448
30 June 2023	113,700	26,390	87,310	499,138
30 June 2024	113,700	22,461	91,239	407,899
30 June 2025	113,700	18,355	95,345	312,554
30 June 2026	113,700	14,065	99,635	212,919
30 June 2027	113,700	9,581	104,119	108,801
30 June 2028	113,700	4,899	108,801	0

State the amount that Daneistis Limited must disclose as a financing cash outflow for the year ended 30 June 2021.

Part C

Compared to one of its competitors, a company has a higher gross profit margin but a lower EBIT (Earnings before interest and tax) profit margin.

Which of the following could explain why this has occurred?

A. The company has incurred relatively more selling and marketing costs than its competitor.

B. All of these could explain why this has occurred.

C. The company has more interest-bearing debt compared to its competitor.

D. The company has a larger volume of sales than its competitor.

E. The company has a lower mark-up compared to its competitor.

Part D

Which of the following is the most likely characteristic of a company with a high asset turnover and a low EBIT profit margin?

A. These ratios would not indicate anything about the company's sales volumes or selling prices.

B. The company sells small volumes of high-priced goods.

C. The company sells large volumes of low-priced goods.

D. The company sells large volumes of high-priced goods.

E. The company sells small volumes of low-priced goods.

Part E

After preparing its draft financial statements, an entity's total current assets are less than its total current liabilities.

The entity is considering whether to reclassify an overdraft balance from an interest-bearing liability to an offset against Cash and cash equivalents.

Based on the figures presented in the statement of financial position, which of the following statements regarding the impact of this reclassification is correct?

A. Both the current ratio and the working capital will remain the same.

B. Both the current ratio and the working capital will decrease.

C. Both the current ratio and the working capital will increase.

D. The current ratio will increase, but the working capital will remain the same.

E. The current ratio will decrease, but the working capital will remain the same.