Pompeii 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 28 February 2019 and 28 February 2018:
$\begin{array}{lcc}
& 2019 & 2018 \
& £ & £ \
\text { Total statement of profit or loss expenses } & 105,422 & 98,717 \
\text { for the year } & 18,995 & 15,632 \
\text { Depreciation for the year } & 2,400 & 1,200 \
\text { Allowance for receivables at the year end } & 5,245 & 4,745 \
\text { Accruals at the year end } & & \
\text { Prepayments at the year end } & 4,388 & 5,265 \
\text { Irrecoverable debt recovered } & 450 & -
\end{array}$ Based on these figures, what was the cash paid for expenses in the financial year ended 28 February 2019?
A) £83,100
B) £83,400
C) £84,300
D) £85,800

Question

Pompeii 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 28 February 2019 and 28 February 2018:
$\begin{array}{lcc} 
& 2019 & 2018 \
& £ & £ \
\text { Total statement of profit or loss expenses } & 105,422 & 98,717 \
\text { for the year } & 18,995 & 15,632 \
\text { Depreciation for the year } & 2,400 & 1,200 \
\text { Allowance for receivables at the year end } & 5,245 & 4,745 \
\text { Accruals at the year end } & & \
\text { Prepayments at the year end } & 4,388 & 5,265 \
\text { Irrecoverable debt recovered } & 450 & -
\end{array}$ Based on these figures, what was the cash paid for expenses in the financial year ended 28 February 2019?
A) £83,100
B) £83,400
C) £84,300
D) £85,800

Quizplus · Accepted Answer

To calculate cash paid for expenses using the direct method, start with total expenses (£105,422), subtract non-cash expenses like depreciation (£2,400), adjust for changes in prepayments (decrease of £877), and add back any irrecoverable debt recovered (£450). This results in £84,300.

Pompeii Limited Draws Up Its Statement of Cash Flows Using