1. The financial statements are interrelated. (a) What element of financial or operating data appears in both the income statement and the owner's equity statement? (b) What item appears on both the balance sheet and the owner's equity statement? (c) What item appears on both the balance sheet and the statement of cash flows? 2. A company had revenues of $ 679,000 and operating expenses of $ 588,000. Did the business (a) incur a net loss or (b) make a net income? They were net income since the income is greater than the incurred cat. 3. a. A business worth $ 900,000 purchases land with an appraised value of $ 750,000 for property tax purposes. Ten years later, the parcel has an estimated value of $ 1,200,000 and the company receives an offer of $ 2,000,000 for it. Should the monetary amount allocated to land in business records now be increased? yes. Assuming that the land acquired in (a) was sold for $ 2,125,000, how would the various elements of the accounting equation be affected? 4. On July 12, Reliable Repair Service extended an offer of $ 150,000 for land with a sale price of $ 185,000. On September 3, Reliable Repair Service accepted the seller's counter offer for $ 167,500. Describe how Reliable Repair Service should register land. 5.Why are most large companies like Microsoft, World PepsiCo, Caterpillar, and AutoZone organized as corporations? 6. Name some users of accounting information. A group of users can be Business owners, managers, directors, suppliers, investors, among others.
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.
1. The financial statements are interrelated.
(a) What element of financial or operating data appears in both the income statement and the owner's equity statement?
(b) What item appears on both the
(c) What item appears on both the balance sheet and the statement of
2. A company had revenues of $ 679,000 and operating expenses of $ 588,000. Did the business
(a) incur a net loss or
(b) make a net income? They were net income since the income is greater than the incurred cat.
3. a. A business worth $ 900,000 purchases land with an appraised value of $ 750,000 for property tax purposes. Ten years later, the parcel has an estimated value of $ 1,200,000 and the company receives an offer of $ 2,000,000 for it.
Should the monetary amount allocated to land in business records now be increased? yes. Assuming that the land acquired in (a) was sold for $ 2,125,000, how would the various elements of the
4. On July 12, Reliable Repair Service extended an offer of $ 150,000 for land with a sale price of $ 185,000. On September 3, Reliable Repair Service accepted the seller's counter offer for $ 167,500. Describe how Reliable Repair Service should register land.
5.Why are most large companies like Microsoft, World PepsiCo, Caterpillar, and AutoZone organized as corporations?
6. Name some users of accounting information. A group of users can be Business owners, managers, directors, suppliers, investors, among others.
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