The following account balances were seen in the books of W. Utility Services on June 30, 2014. Please prepare trial balance, income statement, balance sheet and statement of changes in owner’s equity for W. Utility Services using the data below. Particulars Acct. Balance Accounts Payable 65000 Accounts Receivable 160000 Cash in Bank 350000 Cash on Hand 120000 Insurance Expense 24000 Land 200000 Notes Payable 75000 Office Building 350000 Other Revenue 25000 Prepaid Insurance 12000 Prepaid Rent 12000 Rent Expense 25000 Salaries Expense 75000 Service Revenue 305000 Supplies Expense 24000 Transportation Expense 16000 Utilities Expense 42000 W. Capital 990000 W. Withdrawal 50000
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 following account balances were seen in the books of W. Utility Services on June 30, 2014. Please prepare
Particulars Acct. Balance
Accounts Payable 65000
Accounts Receivable 160000
Cash in Bank 350000
Cash on Hand 120000
Insurance Expense 24000
Land 200000
Notes Payable 75000
Office Building 350000
Other Revenue 25000
Prepaid Insurance 12000
Prepaid Rent 12000
Rent Expense 25000
Salaries Expense 75000
Service Revenue 305000
Supplies Expense 24000
Transportation Expense 16000
Utilities Expense 42000
W. Capital 990000
W. Withdrawal 50000
| Particulars | Debit | Credit |
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