2. The following trial balance was extracted from the books of Syarikat Wawa at 31 Mac 2020: Particulars Capital |Carriage in Carriage out Purchases Office equipment Motor vehicle Sales Wages and salaries Rent and rates Lighting and heating Vehicles running cost Telephone expenses General office expenses RM 63,030 1,620 800 145,800 10,000 8,500 232,950 68,000 3,600 8,400 4,300 9,600 3,180 Debtors Creditors Provision for depreciation: Motor vehicle Office equipment Provision for doubtful debts Drawings Cash at bank |Cash in hand Stock as at 1 April 2019 Return inwards Return outwards 28,400 16,440 4,250 4,000 500 13,570 6,200 300 8,000 3,800 2,900 Additional information as at 31 Mac 2020: i. Stock on hand was valued at RM8,800 Rent and rates prepaid RM1,200 Wages and salaries RM1,750 Depreciation is to be provided as follows: a. Motor vehicles b. Office equipment ii. ii. iv. 50 % reducing balance method 20% straight line method
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
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