The adjusted trial balance of Marineland Travel Designers at December 31, 20X6, follows. MARINELAND TRAVEL DESIGNERS Adjusted Trial Balance December 31, 20X6 Cash 1,320 Accounts receivable 4,920 Supplies 2,300 Prepaid rent 1,600 Office equipment 20,180 Accumulated depreciation—office equipment Rs. 4,350 Office furniture 37,710 Accumulated depreciation—office furniture 4,870 Accounts payable 4,740 Interest payable 830 Unearned service revenue 620 Note payable 13,500 Ken Sorley, capital 26,090 Ken Sorley, drawings 29,000 Service revenue 120,910 Depreciation expense—office equipment 6,680 Depreciation expense—office furniture 2,370 Salary expense 39,900 Rent expense 17,400 Interest expense 3,100 Utilities expense 2,670 Insurance expense 3,810 Supplies expense 2,950 Total 175, 910 175,910 Find out the following ratio: Efficiency ratio/Asset Activity
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.
The adjusted
MARINELAND TRAVEL DESIGNERS
Adjusted Trial Balance December 31, 20X6
Cash |
1,320 |
|
Accounts receivable |
4,920 |
|
Supplies |
2,300 |
|
Prepaid rent |
1,600 |
|
Office equipment |
20,180 |
|
Accumulated |
|
Rs. 4,350 |
Office furniture |
37,710 |
|
Accumulated depreciation—office furniture |
|
4,870 |
Accounts payable |
|
4,740 |
Interest payable |
|
830 |
Unearned service revenue |
|
620 |
Note payable |
|
13,500 |
Ken Sorley, capital |
|
26,090 |
Ken Sorley, drawings |
29,000 |
|
Service revenue |
|
120,910 |
Depreciation expense—office equipment |
6,680 |
|
Depreciation expense—office furniture |
2,370 |
|
Salary expense |
39,900 |
|
Rent expense |
17,400 |
|
Interest expense |
3,100 |
|
Utilities expense |
2,670 |
|
Insurance expense |
3,810 |
|
Supplies expense |
2,950 |
|
Total |
175, 910 |
175,910 |
Find out the following ratio:
- Efficiency ratio/Asset Activity
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