nt Rs. 5DD0 nto busin es Dec. 31.Paid half armount of notes payable Requred. (Post entries to ledger accounts (m) Extract a trial balance at 31 st December, 2019 () Prepare Baliance Sheet for the month en ded 3
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.
Question
Dec 1. Mr Rasool commenced business with the Capital of Rs. 10,00,000 cash.
Dec 1Purchased for Rs 140000 equipment and made Rs. 40000 Cash and issued 6
montha notes payable for bala nce amount at 6' per ann um interest.
Dec 2 Purcha sed office furniture for Rs. 240000 end paid Ra. 150000 in ca sh and
balence to bepaid in 30 days with useful ife of 5years.
Dec 3.Purchased offi ce supples on account from Flowers inc, for Rs. 65000.
Payment is due within 30 days.
Dec 5. Purcha sed computer systems for Rs. 1 00000 from AP Computers and paid
Rs. 20000 in cash. Balance amount to be paid in two equal installments on
December 21, and January 10 next year
Dec 17. HB Bros., found that a computer system was not working well that was
purchased from AP Computer on account. Therefore, thecompa ny returned this
system that costa Rs. 12500.
Dec 21. Rented a small portion of land to a firm for business activities at Rs. 2000
per day. However, full amount will be collected when business activities cometo an
end. The activities are expected to lest for at least next two weeks.
Dec 21. Paid first inst allment of computer syst em purchased from AP Compu ters.
Dec 26 He withdraws Rs 10,000 from business for personal use
Dec 27. Mr Rasool take ane computer system from business to personal ute at
home Rs. 200000
Dec. 29 He invested amount Rs. 5DD0 nto busin es
Dec. 31.Paid half armount of notes payable
Requred.
(
(m) Extract a
() Prepare Baliance Sheet for the month en ded 3 1st December, 2019
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