The following was the trial balance extract from ABC Trading as at 31 March 2019. Particulars DEBIT (RM) CREDIT (RM) Purchases and Sales 22,860 41,000 Inventory on 1 April 2018 5,100 Capital 8,170 Bank overdraft 4,300 Cash 140 Discount allowed and received 1,440 930 Returns inwards and outwards 790 570 Carriage outwards 2,180 Office expenses 450 Fixtures and fittings 1,210 Delivery van 2,000 Accounts receivables and account payables 11,900 6,720 Rent and insurance 1,790 Drawings 2,850 Wages and salaries 8,980 TOTAL 61,690 61,690 Additional information as at 31 March 2019: Inventory on 31 March 2019 was RM4,250 Wages and salaries accrued as at 31 march 2019 was RM210; outstanding office expenses was RM30 Rent and insurance prepaid was RM150
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 was the
trial balance extract from ABC Trading as at 31 March 2019.
|
Particulars |
DEBIT (RM) |
CREDIT (RM) |
|
Purchases and Sales |
22,860 |
41,000 |
|
Inventory on 1 April 2018 |
5,100 |
|
|
Capital |
8,170 |
|
|
Bank overdraft |
4,300 |
|
|
Cash |
140 |
|
|
Discount allowed and received |
1,440 |
930 |
|
Returns inwards and outwards |
790 |
570 |
|
Carriage outwards |
2,180 |
|
|
Office expenses |
450 |
|
|
Fixtures and fittings |
1,210 |
|
|
Delivery van |
2,000 |
|
|
Accounts receivables and account payables |
11,900 |
6,720 |
|
Rent and insurance |
1,790 |
|
|
Drawings |
2,850 |
|
|
Wages and salaries |
8,980 |
|
|
TOTAL |
61,690 |
61,690 |
Additional information as at 31 March 2019:
- Inventory on 31 March 2019 was RM4,250
- Wages and salaries accrued as at 31 march 2019 was RM210; outstanding office expenses was RM30
- Rent and insurance prepaid was RM150
Required:
- Prepare
Statement of Financial Position as at 31 March 2019
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