Sharifah Aini is the owner of COMEI ENTERPRISE, who sells women clothes and accessories since 2018. Presented below is the unadjusted trial balance of COMEI ENTERPRISE as at 31 December 2021. COMEI ENTERPRISE Unadjusted Trial Balance as at 31 December 2021 Account's name Credit (RM) Debit (RM) 50,700 15,000 78,690 Cash Supplies 1.1.2021 Accounts receivable Allowance for doubtful debt Merchandise inventory as at 1.1.2021 Store equipment (at cost) Accumulated depreciation-Store equipment Motor vehicles (at cost) Accumulated depreciation-Motor vehicles Accounts payables Notes payable Owner's capital Owner's drawings Purchases 4,500 90,000 117,180 30,180 29,450 12,300 38,340 45,050 168,420 65,340 296,770 Purchase return 29,390 715,920 Sales Sales return Interest expenses Salaries expenses Prepaid insurance Rent expenses Total 39,220 8,250 170,000 17,500 66,000 1,044,100 1,044,100 The following additional information were available at 31 December 2021: 1. Prepaid insurance expired during the year is RM5,100. 2. Interest on the notes payable of RM4,500 is not yet paid. 3. One of the customers was declared bankrupt and unable to settle his debts amounting to RM500. 4. Depreciation on non-current assets will be charged as follows: Store equipment 10% on cost Motor vehicles 20% on reducing balance method 5. Supplies remained on hand as at 31 December 2021 amounting to RM6,450. 6. A physical count of ending inventory showed RM110,700 is still available as at 31 December 2021.
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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