The following transactions are taken from Pak Maun Enterprise in November 2020: Nov 1 Starting business with cash in hand RM18,000 and cash in bank account RM100,000 3 Purchased office furniture worth RM24,000 from Kedai Perabot Dinesh 4 Purchased business inventories worth RM12,800 using cheque 5 Sold inventories worth RM6,000 to Kedai Mei Ling 7 Kedai Mei Ling returned defective inventories worth RM920 9 Withdrawal (business inventories) worth RM480 for family use 10 Received cheque from Kedai Mei Ling RM3,400 12 Purchased business inventories worth RM27,200 from Pembekal Syazwani 15 Returned business inventories worth RM560 to Pembekal Syazwani (wrong brand) 16 Cash sale RM2,400 20 Paid to Pembekal Syazwani using cheque RM14,000 22 Paid rental fee RM2,000 using cash 29 Paid workers’ salaries RM2,800 using cheque (i)Record the above transactions into the respective ledgers and balance the accounts. (ii)Prepare the trial balance on 30th November 2020 (iii)Prepare the income statement and balance sheet for Pak Maun Enterprise
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 transactions are taken from Pak Maun Enterprise in November 2020:
Nov 1 Starting business with cash in hand RM18,000 and cash in bank account RM100,000
3 Purchased office furniture worth RM24,000 from Kedai Perabot Dinesh
4 Purchased business inventories worth RM12,800 using cheque
5 Sold inventories worth RM6,000 to Kedai Mei Ling
7 Kedai Mei Ling returned defective inventories worth RM920
9 Withdrawal (business inventories) worth RM480 for family use
10 Received cheque from Kedai Mei Ling RM3,400
12 Purchased business inventories worth RM27,200 from Pembekal Syazwani
15 Returned business inventories worth RM560 to Pembekal Syazwani (wrong brand)
16 Cash sale RM2,400
20 Paid to Pembekal Syazwani using cheque RM14,000
22 Paid rental fee RM2,000 using cash
29 Paid workers’ salaries RM2,800 using cheque
(i)Record the above transactions into the respective ledgers and balance the accounts.
(ii)Prepare the
(iii)Prepare the income statement and balance sheet for Pak Maun Enterprise
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