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QUESTION 1 [25 MARKS] The following information has been extracted from the financial statements of Abigail Ltd for the year ended 30 September 2020. Statements of financial position as at: 2020 2019 $ 000 $ 000 Non-current assets Property, plant & equipment 17,000 14,000 Intangible assets 1,500 1,800 18,500 15,800 Current assets Inventories 11,000 10,000 Receivables 6,300 4,100 Cash at bank and in hand 5,200 9,400 22,500 23,500 Total assets 41,000 39,300 Equity and liabilities Equity shares of $1 each Share premium Revaluation reserve Retained earnings Total equity 500 1,700 300 9,000 11,500 400 1,500 100 7,500 9,500 Non-current liabilities 7% Loan notes 7,450 1,550 27,250 Current liabilities Trade payables Overdraft Interest Taxation 18,000 3,700 200 150 22,050 400 600 28,250 Total equity and liabilities 41,000 39,300 Statement of profit or loss for the year ended 30 September 2020 $ 000 Revenue 85,000 Cost of sales (71,000 Gross profit 14,000 Interest income 200 14,200 Operating expenses (11,000) Finance costs (1,000) Profit before tax 2,200 Taxation (200) Profit after tax 2,000 Following relevant information is available: 1. Details regarding the property, plant & equipment is as shown hereunder: As at: Cost $ 000 30 September 2019 16,000 30 September 2020 20,000 2. An item of plant with a carrying amount of $ 965,000 (cost: $ 1.5 million) was sold at a profit of $ 150,000 during the year. 3. Intangible assets comprise mainly of software was amortised by $ 600,000 during the year and was charged to operating expenses. There was only addition during the year. 4. The revaluation reserve relates only to the revaluation of property, plant & equipment 5. Right shares were issued on 1 August 2020 at $ 3 per share in the ratio of 1 right share for every 4 shares held. 6. Dividend of $ 1 was paid on 30 September 2020 to each shareholder. REQUIRED (a) Prepare statement of cash flows for the year ended 30 September 2020 in accordance with the requirements of International Financial Reporting Standards using the indirect method. [22 Marks) (b) Briefly explain the advantages of cash flow accounting. [3 Marks]