The following trial balance was extracted from the books of Syarikat Wawa at 31 Mac 2020: Particulars RM Capital 63,030 Carriage in 1,620 Carriage out 800 Purchases 145,800 Office equipment 10,000 Motor vehicle 8,500 Sales 232,950 Wages and salaries 68,000 Rent and rates 3,600 Lighting and heating 8,400 Vehicles running cost 4,300 Telephone expenses 9,600 General office expenses 3,180 Debtors 28,400 Creditors 16,440 Provision for depreciation: Motor vehicle Office equipment 4,250 4,000 Provision for doubtful debts 500 Drawings 13,570 Cash at bank 6,200 Cash in hand 300 Stock as at 1 April 2019 8,000 Return inwards 3,800 Return outwards 2,900 Additional information as at 31 Mac 2020: Stock on hand was valued at RM8,800 Rent and rates prepaid RM1,200 iii. Wages and salaries RM1,750 Depreciation is to be provided as follows: Motor vehicles - 50 % reducing balance method Office equipment - 20% straight line method The doubtful debts provision is to be maintained at 2% of closing debtors. Required: 1.a) Statement Profit or Loss and Other Comprehensive Income for the year ended 31 Mac 2020.
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
trial balance was extracted from the books of Syarikat Wawa at 31 Mac 2020:
Particulars |
RM |
Capital |
63,030 |
Carriage in |
1,620 |
Carriage out |
800 |
Purchases |
145,800 |
Office equipment |
10,000 |
Motor vehicle |
8,500 |
Sales |
232,950 |
Wages and salaries |
68,000 |
Rent and rates |
3,600 |
Lighting and heating |
8,400 |
Vehicles running cost |
4,300 |
Telephone expenses |
9,600 |
General office expenses |
3,180 |
Debtors |
28,400 |
Creditors |
16,440 |
Provision for Motor vehicle Office equipment |
4,250 4,000 |
Provision for doubtful debts |
500 |
Drawings |
13,570 |
Cash at bank |
6,200 |
Cash in hand |
300 |
Stock as at 1 April 2019 |
8,000 |
Return inwards |
3,800 |
Return outwards |
2,900 |
Additional information as at 31 Mac 2020:
- Stock on hand was valued at RM8,800
- Rent and rates prepaid RM1,200
iii. Wages and salaries RM1,750
- Depreciation is to be provided as follows:
- Motor vehicles - 50 %
reducing balance method - Office equipment - 20%
straight line method - The doubtful debts provision is to be maintained at 2% of closing debtors. Required:
1.a) Statement Profit or Loss and Other Comprehensive Income for the year ended 31 Mac 2020.
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