The May 31, 2016 trial balance for Rosalina Besario Surveyors is presented as follows: Rosalina Besario Surveyors
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 May 31, 2016
Rosalina Besario Surveyors
Trial Balance May 31, 2016
Cash P 210,000
Prepaid Advertising 360,000
Engineering Supplies 270,000
Survey Equipment 1,890,000
Accum.
Accounts Payable 190,000
Unearned Survey Revenues 120,000
Notes Payable 500,000
Betario, Capital 1,120,000
Besario, Withdrawals 700,000
Survey Revenues 6,510,000
Salaries Expense 3,270,000
Rent Expense 960,000
Insurance Expense 250,000
Utilities Expense 160,000
Miscellaneous Expense 80,000
Totals P9,080,000 P9,080,000
The following information pertaining to the year-end adjustments is available:
- The P360,000 prepaid advertising represents expenditure made on Nov. 1, 2015 for monthly advertising over the next 18 months.
- A count of the engineering supplies at May 31, 2016 amounted to P90,000
- Depreciation on the surveying equipment amounted to P160,000.
- One-third of the unearned survey revenues has been earned at year-end.
- At year-end, salaries in the amount of P140,000 have accrued.
- Interest of P60,000 on the notes payable has accrued at year-end.
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