1. Mr Hidayat is a sole trade who maintain his non-current asset at cost. On 31 December 2019, he owned the following non-current asset which had been depreciated on a yearly basis: Asset Motor vehides Fixtures Cost (RM) 260,000 74,000 Accumulated Depreciation (RM) 70,000 37,200 During the year ended 31 December 2020, motor vehicles worth RM100,000 and fixtures worth RM13,000 were purchased. The motor vehicles were depreciated at 10 % per annum using the straight-line method and the fixtures at 20% per annum using the reducing balance method. Required: a) Motor vehicles account b) Fixtures account c) Accumulated depreciation accounts for each of the non-current assets for the ended 31 December 2020 d) Statement of Financial Position (extract) as at 31 December 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.
Chapter :
Step by step
Solved in 3 steps with 8 images
