QUESTION 5 (20)

5.1 Study the extracts of the Cash Flow Statement of Conlog Limited for the year ended 31 December 2020 and answer the following:

5.1.1 What do you understand by Cash flow from operating activities R 150 000? (4)

5.1.2 Name three transactions that improve cash flow but do not increase profit. (6)

5.1.3 There is a combination of a positive net cash flow from operating activities and a negative cash flow from investing activities. Is this good for the company? Explain. (5) INFORMATION: Conlog Limited Extracts of Cash Flow Statement for the year ended 31 December 2020 R Cash flow from operating activities 210 000 Cash flow from investing activities (330 000) Additions to plant and machinery (330 000) Cash flow from financing activities 120 000 Increase in long term borrowings 120 000

5.2 Calculate the incremental profit/loss after tax. (5)

INFORMATION: Lubners Traders is considering extending credit to some customers who may be at risk of defaulting in payment. Sales will increase by R200 000 if credit is granted to these customers. From the new accounts receivable generated, 8% is expected to be uncollectable. Additional collection costs will be 3% of sales, and the production and selling costs will be 65% of sales. Taxation is 28%