8.Mr. Ajay's trial balance is as follows. Trial Balance for the year ended 31* March, 2017 Debit Balances Amt Credit Balances Amt 15,000 By Capital 45,700 By Bills Payable 9,900 By Outstanding Salaries 3,500 | By Sales 4,600 By Creditors 3,400 By Bank Overdraft 750 10,000 To Opening Stock To Purchases 65,000 6,000 1,700 79,800 12,000 To Wages To Investment To Carriage outwards To Printing and Stationary To Insurance 3,000 To Salary To Postage and telegram To Machinery To Furniture 700 26,800 6,400 25,000 4,000 6,000 1,000 250 4,500 To Debtors To Bills Receivable To Cash at Bank To Advertisement To Bad debts To Carriage inwards 1,67,500 1,67,500 10 Adjustments : 1) Closing stock 40,200 2) Goods destroyed by fire 74,000,insurance company admitted claim for ? 3,200 3) Prepaid insurance premium ? 250 4) On 1 April 2016 purchased machinery and paid transport, octroi 1,000 but included in carriage inwards. 5) Depreciate machinery by 10% and furniture by 15% 6) Outstanding expenses : wages 2,100. From the above information and adjustment prepare Trading and Profit and Loss account for the year ended 31 March, 2017 and Balance Sheet on that date. (GP=47,800, NP=22,810, B/s =1,12,610)
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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