The following list of account balances were extracted from the books of Ahmed and Company at 30 April 2013. Amount in Rs. (000) Revenue 18,955 Purchases 12,556 Inventory 1 May 2012 3,776 Salaries and wages 2,447 Motor expenses 664 Rent 456 Rates 120 Insurance 146 Packing charges 276 Lighting 665 Sundry expenses 115 Motor vehicles 2,400 Fixtures & fittings 600 Trade receivables 4,577 Trade payables 3,045 Cash at bank 3,876 Cash in hand 120 Drawings 2,050 Capital 12,844 Prepare trial balance Prepare income statement and inventory on 30 April 2013 is 4,998,000 Prepare statement of financial position
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 list of account balances were extracted from the books of Ahmed and Company at 30 April 2013.
Amount in Rs. (000)
Revenue 18,955
Purchases 12,556
Inventory 1 May 2012 3,776
Salaries and wages 2,447
Motor expenses 664
Rent 456
Rates 120
Insurance 146
Packing charges 276
Lighting 665
Sundry expenses 115
Motor vehicles 2,400
Fixtures & fittings 600
Trade receivables 4,577
Trade payables 3,045
Cash at bank 3,876
Cash in hand 120
Drawings 2,050
Capital 12,844
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trial balance - Prepare income statement and inventory on 30 April 2013 is 4,998,000
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