Php Accounts Payable Accounts Receivable 122,500 219,000 Accumulated Depreciation - Building Accumulated Depreciation - Equipment Advertising Expense 60,000 60,000 105,000 Art Revenues 1,437,500 450,000 36,200 30,000 Building Cash Depreciation Expense - Building Depreciation Expense- Equipment Equipment Interest Expense 30,000 217,000 37,000 120,000 Land Miscellaneous Expense Mortgage Payable Notes Payable Office Supplies Representation Expense Salaries Expense Salaries Payable Travel Expense Usop, Capital, 1/1/2018 Usop, Withdrawals 24,600 395,000 213,000 17,200 164,000 673,200 17,300 159,000 50,500 148,600 During the year, Usop invested additional Php 75,000 in the business. Required: Prepare the income statement using the single-step format and the balance sheet using the account form.
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.
1. Prepare the income statement using the single-step format and the balance sheet using the account form.
2. Insert the missing figures in the income statement above. Note that the Gross Profit is 40% of Net Sales and Profit is 10% of Net Sales.
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