Zepra Gifts has extracted the following information from its records, following the close of its books on 31^st December, 2018:

Account	RM
Wages Payable	960
Utilities expense	5,856
Cost of Sales	17,280
Dividends received	6,912
Interest received	1,200
Administrative Expenses	2,074
Interest expenses	691
Accumulated depreciation Building	17,280
Depreciation expense, Building	3,456
Wages and salaries	10,368
Cash on hand	6,912
Inventories	11,750
Building	48,384
Sales	41,472
Accounts Payable	13,824
Capital	7,843
Loan (due in 5 years)	17,280

Required:

1. Prepare the relevant income statement and balance sheet, based on the information provided above, for Zepra Gifts.
2. Sandra, ZepraGifts owner, mentions that she does not use the balance sheet to assess the performance of ZepraGift because this statement shows a snapshot of the business at a certain point in time and does not show the flow of business over time. She likens this situation to trying to understand a movie story based on just specific scenes released for promoting the product, which may not reflect the overall product. She asks for your opinion on this view. Discuss Sandras perspective. You may agree or disagree with her view, but you must justify your stance based on any one item shown on the balance sheet.

3. Start typing here

4. You are studying some annual reports of listed firms, and note that a particular firm has recorded positive net cash flows from operating activities for a certain year and negative net cash flows from operations the following year. Your classmate mentions that this indicates bad news and the firm is unlikely to survive over the long term, and it should cease operations before it loses more money. Consider an example where this view could be supported, as well as another example where this view may not hold, and discuss whether you agree with your classmates view.

5. Start typing here

   (11 + 5 + 5 = 21 marks)