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Question 1: (45 Marks) The statement of financial position of Robert Limited at 30 June were as follows: 2020 2019 Rs000 Rs000 Rs000 Rs000 Non-current assets Equipment 1,840 1,220 Current Assets Inventory 960 1,018 Trade receivables 1,222 1,138 Cash 158 2,340 2,156 4,180 3,376 Share capital and reserves Issued share capital Retained earnings 1,600 1,000 820 700 2,420 1,700 Non-current liabilities 10% loan 1,000 800 Current Liabilities Bank overdraft 104 730 748 Trade payables Taxation 30 760 24 876 4,180 3,376 Notes 1. At 30th June 2019, equipment had cost Rs1,810,000 and at 30th June 2020, equipment had cost Rs2,480,000. Amount shown in the statement of financial position are at net book values. 2. During the year, equipment which had cost Rs344,000, with a net book value of Rs 142,000 was sold for Rs 180,000 3. The income statement includes a tax charge of Rs28,000. 4. Interest of Rs80,000 was paid during the year 30 June 2020. 5. Dividends of Rs150,000 were paid during the year ended 304 June 2020. Required: (a) Prepare a statement of cash flows for the year ended 30th June 2020 in accordance with IAS 7. (25 marks) (b) At a recent meeting, the chairman, who is from a non-accounting background, made the following statement: 'I don't see the point of preparing a statement of cash flows. The income statement already shows whether our business is profitable or not. So long as we are profitable, there should not be any cash problems. Evaluate the chairman's statement. (20 marks)