2.PREPARE THE THE COMPANY FINANCIAL STATEMENT UNADJUSTED TRIAL BALANCE ADJUSTMENT ADJUSTED TIAL BALANCE ACCOUNTT TITLE DEBIT CREDIT DEBIT CREDIT DEBIT CREDIT account payable 60,000 60,000 Account receivable 65,000 65,000 Bank 40,000 2,000 38,000 Capital 170,000 170,000 Cash 2,000 1,000 2,000 Comission paid 4,300 4,300 Comission received 1,500 1,500 Discount Allowed 2,300 2,300 Discount Received 3,500 3,500 Donations 500 500 Drawings Fixture and Fittings Freight inwards Freight outward General Expenses 500 500 35,000 35,000 1000 1,000 1,400 1,400 2,300 3,600 2300 Insurance premium 3,600 Interest received on investment 5,000 5,000 Land and building 80,000 80,000 Loan from Mbb 67,500 67,500 opening inventory 1 JAN 2019 26,000 26,000 Patent 50,000 50,000 Printing and stationery 700 700 Purchases 65,000 65,000 Rates and taxes 3,200 3,200 Rental paid 4,000 4,000 Rental revenue 3,000 3,000 Return inwards 1,500 1,500 Returns Outwars 1,800 1,800 Sales 88,000 88,000 Wages and salaries Electricity Expense Accrued Electricity 12,000 1,566 12,000 1,566 1,566 1,566 1,566 1,566 Utilities bill 500 500 500 De preciation 7,000 7,000 7,000 Accumulated Depreciation 7,000 7,000 7,000 unearned Rental Revenue 1,000 1,000 1,000 Prepaid rental 1,500 1,500 Total 400300 400300 11566 11566 409,866 409,866
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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