Prepare Balance Sheet and Statement of Owner's Equity for Adam Investment Cooperation for the year endec on July 31", 2022 Cash Electricity expense 40,000 180,500 Prepaid electricity 90,500 8,300 11,700 5,500 Sales Purchased Fright IN Salary payable Maintenance expense 7,500 8,400 15,000 21,800 Interest expense Depreciation expenses-Vehicle Accumulated depreciation-vehicle 5,000 20,000 60,000 80,000 6,300 50,000 Vehicle Rent expense Land Prepaid rent Building Rent revenue 10,500 Unearned rent 8,500 150,000 Accumulated depreciation - Building 62,000 22,000 Owner's investment 1500 Owner's drawing Retain earning Note payable (Due for payment 2030) Customer refund payable Marketing expenses Office supplies Merchandise Inventory on July 31", 2022 30,600 6000 12,500 40,000 6,100 10,500 Estimated inventory return Account Receivable 29700 Account Payable 48500 Proportion of note payable due in this 5000 Net income for the year 100,000 year Note: the balance sheet is not balancing
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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