At 31 January 2020 the following trial balance was extracted from the books of Yusiti. Particulars Debit RM Credit RM Capital 1 February 2019 101,430 Vehicles at cost 35,000 Equipment at cost 80,000 Purchases and sales 284,680 503,520 Provision for depreciation at 1 February 2019: Vehicles Equipment 21,000 35,000 Return inward and return outwards 1,340 650 Finance expenses 1,220 Stock at 1 February 2019 25,570 Vehicles expenses 4,930 Rent, rates and insurance 7,420 Office expenses 21,940 Drawings 23,550 Petty cash 200 Wages and salaries 95,370 Bad debts 1,240 Debtors and creditors 83,210 18,950 Cash at bank 14,880 TOTAL 680,550 680,550 Additional information as at 31 January 2020: No. Particulars RM i. Stock valued at 29,750 ii. Insurance prepaid 340 iii. Goods taken from stock for own use 420 iv. Wages due 2,400 v. Provision for doubtful debt required 620 vi. Provision for depreciation is to be provided as follows: Vehicles - straight line method Equipment - reducing balance method 30% 25% Required: b) Statement of Financial Position as at 31 January 2020.
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.
- At 31 January 2020 the following
trial balance was extracted from the books of Yusiti.
|
Particulars |
Debit RM |
Credit RM |
|
Capital 1 February 2019 |
101,430 |
|
|
Vehicles at cost |
35,000 |
|
|
Equipment at cost |
80,000 |
|
|
Purchases and sales |
284,680 |
503,520 |
|
Provision for Equipment |
21,000 35,000 |
|
|
Return inward and return outwards |
1,340 |
650 |
|
Finance expenses |
1,220 |
|
|
Stock at 1 February 2019 |
25,570 |
|
|
Vehicles expenses |
4,930 |
|
|
Rent, rates and insurance |
7,420 |
|
|
Office expenses |
21,940 |
|
|
Drawings |
23,550 |
|
|
Petty cash |
200 |
|
|
Wages and salaries |
95,370 |
|
|
|
1,240 |
|
|
Debtors and creditors |
83,210 |
18,950 |
|
Cash at bank |
14,880 |
|
|
TOTAL |
680,550 |
680,550 |
Additional information as at 31 January 2020:
|
No. |
Particulars |
RM |
|
i. |
Stock valued at |
29,750 |
|
ii. |
Insurance prepaid |
340 |
|
iii. |
Goods taken from stock for own use |
420 |
|
iv. |
Wages due |
2,400 |
|
v. |
Provision for doubtful debt required |
620 |
|
vi. |
Provision for depreciation is to be provided as follows: Vehicles - Equipment - |
30% 25% |
Required:
- b)
Statement of Financial Position as at 31 January 2020.
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