Accounting 9706 · AS & A Level · Regulatory and ethical considerations

Regulatory and ethical considerations — practice question

Refer to Source C in the insert.
(a)[2]

Explain why a statement of cash flows normally begins with profit.

(b)[5]

Calculate profit from operations for the year ending 31 August 2025.

(c)[12]

Complete the following table to show the effect of each action on the statement of cash flows. In your explanation, state which section or sections of the statement of cash flows are affected. If an action has no impact on the statement of cash flows, explain why no impact arises.

(d)[2]

Suggest two ways of funding that would be excluded from cash flow from financing activities.

(e)[2]

State why it matters that the financial statements of PI plc are prepared with professional competence and due care.

(f)[2]

State the key distinction between the directors’ responsibilities and the auditor’s responsibilities in relation to the financial statements.

Worked solution & mark scheme

This 25-mark question has a full step-by-step worked solution and mark scheme. One marking point: Because it matches profit with movements in cash and cash equivalents

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