Gabii Limited Draws Up Its Statement of Cash Flows Using

question 28

Multiple Choice

Gabii Limited draws up its statement of cash flows using the direct method. The company presents the following balances in its financial statements for the years ended 31 March 2019 and 31 March 2018:
$\begin{array}{lcc} & 2019 & 2018 \\& £ & £ \\\text { Prepayments at the year end } & 5,728 & 6,329 \\\text { Accruals at the year end } & 8,491 & 7,795 \\\text { Total statement of profit or loss expenses } & 104,292 & 95,670 \\\text { for the year } & 25,445 & 22,386 \\\text { Depreciation for the year } & 3,422 & 4,686\end{array}$ Based on these figures, what cash payments were made for expenses in the financial year ended 31 May 2019?

• A) £75,882
• B) £76,286
• C) £78,814
• D) £78,880

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Definitions:

Depreciation

The methodical distribution of the expense of a physical asset across its lifespan.

Plant Assets

Tangible assets used in a company's operations that have a useful life of more than one year.

Notes Payable

A written agreement to pay a specified amount, usually including interest, by a certain date.

Direct Method

A way of preparing a cash flow statement where actual cash flows from operating activities are listed directly.