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