Paper 3 · Statement of cash flows

Medals Limited's inventory was $400 000 at 31 December 2017 and$ 470 000 at 31 December 2018. What was the increase in inventory during the year, as used in preparing the statement of cash flows?

Model answer

$70000

Also accepted: 70000, $70 000, 70 000, $70,000, 70,000

Explanation: Increase in inventory = closing inventory - opening inventory =

470 000 -

400 000 = $70 000. This increase represents cash tied up in inventory and is deducted in arriving at cash generated from operations.

Derived from ZIMSEC Accounting Paper 3, June 2019, Q2

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