Below is a trial balance of Ali Mamat Enterprise, extracted after one year’s trading. Ali Mamat Enterprise Trial Balance as at 31 December 2019 Particulars Debit (RM) Credit (RM) Sales 190,576 Purchases 119,832 Salaries 56,527 Motor expenses 2,416 Rent 1,894 Insurance 372 General expenses 85 Premises 95,420 Motor vehicles 16,594 Account receivables 26,740 Account payable 16,524 Cash at bank 16,519 Cash in hand 342 Drawings 8,425 Capital 138,066 TOTAL 345,166 345,166 Required: i. Statement of Profit or Loss and Others Comprehensive Income for the year ended 31 December 2019. ii. Statement of Financial Position as at 31 December 2019.
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.
Below is a
Ali Mamat Enterprise
Trial Balance as at 31 December 2019
Particulars Debit (RM) Credit (RM)
Sales 190,576
Purchases 119,832
Salaries 56,527
Motor expenses 2,416
Rent 1,894
Insurance 372
General expenses 85
Premises 95,420
Motor vehicles 16,594
Account payable 16,524
Cash at bank 16,519
Cash in hand 342
Drawings 8,425
Capital 138,066
TOTAL 345,166 345,166
Required:
i. Statement of Profit or Loss and Others Comprehensive Income for the year
ended 31 December 2019.
ii.
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