Question.1: Selected transactions for A. Aslam, a property manager, in her first month of business, are as follows. Jan. 2 Invested RS15,000 cash in business. 3 Purchased used car for RS5,200 cash for use in business. 9 Purchased supplies on account for RS500. 11 Billed customers RS2,100 for services performed. 16 Paid RS450 cash for advertising. 20 Received RS1,300 cash from customers billed on January 11. 23 Paid creditor RS300 cash on balance owed. 28 Withdrew RS2,000 cash for personal use of owner. Instructions For each transaction indicate the following. (d) The normal balance of the specific account. Use the following format, in which the January 2 transaction is given as an example. Account Debited Account Credited (a) (b) (c) (d) (a) (b) (c) (d) Basic Specific Normal Basic Specific Normal Date Type Account Effect Balance Type Account Effect Balance Jan. 2 A Cash Incr. Debit OE Owner’s Incr. Credit Capital
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.1: Selected transactions for A. Aslam, a property manager, in her first month of business, are as follows.
Jan. 2 Invested RS15,000 cash in business.
3 Purchased used car for RS5,200 cash for use in business.
9 Purchased supplies on account for RS500.
11 Billed customers RS2,100 for services performed.
16 Paid RS450 cash for advertising.
20 Received RS1,300 cash from customers billed on January 11.
23 Paid creditor RS300 cash on balance owed.
28 Withdrew RS2,000 cash for personal use of owner.
Instructions
For each transaction indicate the following.
(d) The normal balance of the specific account.
Use the following format, in which the January 2 transaction is given as an example.
Account Debited Account Credited
(a) (b) (c) (d) (a) (b) (c) (d)
Basic Specific Normal Basic Specific Normal
Date Type Account Effect Balance Type Account Effect Balance
Jan. 2 A Cash Incr. Debit OE Owner’s Incr. Credit
Capital
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