Prepare the Statement of Financial Position as at 28 February 2021. (The notes to the financial statements are not required.) INFORMATION The following list of balances was obtained from the accounting records of Stanger Stores (with Stan and Gerald as partners) on 28 February 2021, the end of the financial year, after all the adjustments and closing transfers were completed. LIST OF BALANCES AS AT 28 FEBRUARY 2021 Debit (R) Credit (R) Capital: Stan 2 400 000 Capital: Gerald 1 200 000 Current account: Stan 4 000 Current account: Gerald 102 000 Land and buildings 3 440 000 Equipment at cost 320 000 Accumulated depreciation on vehicles 152 000 Fixed deposit (matures on 31 March 2022) 162 000 Trading inventory 830 000 Debtors control 84 000 Provision for bad debts 4 000 Bank 60 000 Cash float 10 000 Creditors control 100 000 Loan: Web Bank (R160 000 is payable in the next financial year) 960 000 Accrued expenses 2 600 Income received in advance 1 400 Consumable stores on hand 2 000 Prepaid expenses 4 000 Accrued income 6 000 4 922 000 4 922 000
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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