1. The statement of financial position of Fateh Enterprise, a sole trader, for two successive years are shown below. Statement of Financial Position as 31 December 2019 2020 RM RM RM RM Non Current Asset Land and premi ses (cost RM52,000] Plant and machinery: (Cost RM19,000) (Cost RM25,000) 44,000 40,000 14,250 19,600 59.600 58,250 Current Asset Inventory Trade account receivable Bank 6,600 17,800 6,300 12,600 7,100 24 400 82.650 26.000 85.600 FINANCED BY : Capital account: Balance at 1 January Add Net Profit for the year 42,000 18.000 47,000 22.000 60,000 (13,000) 47,000 69,000 (15,000) 54,000 Less-Drawing Current Liabilitios Trade account peyable Bank overdraft 11,600 22,000 13,650 35,650 11,600 Non Current Linhilities Loan(repayable December 2022) 20.000 35.600 82.650 Required: Prepare statement of cash flow for Fateh Enterprise for the year ended 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.
1 Chapter :
![1. The statement of financial position of Fateh Enterprise, a sole trader, for two
successive years are shown below.
Statement of Financial Position as 31 December
2020
RM
2019
RM
RM
RM
Non Current Asşet
Land and premises (cost RM52,000]
Plant and machinery:
(Cost RM19,000)
(Cost RM25,000)
44,000
40,000
14,250
58,250
19,600
59,600
Current Asset
Inventory
Trade account receivable
Bank
6,600
17,800
6,300
12,600
7,100
24.400
82.650
26.000
85.600
FINANCED BY :
Capital account:
Balance at 1 January
Add: Net Profit for the year
42,000
18.000
47,000
22.000
60,000
(13,000)
47,000
69,000
(15,000)
54,000
Less:Drawing
Current Liabilities
Trade account payable
Bank overdraft
22,000
13,650
11,600
35,650
11,600
Non Current Linbilities
Loan(repayable December 2022)
20.000
85.600
82.650
Required:
Prepare statement of cash flow for Fateh Enterprise for the year ended 31 December
2020.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe23dafb0-2a22-4bd0-af4c-2b7e580b4351%2F2a8fb3bf-bcc4-484f-847e-a1ef8add0266%2F2mnt7g9_processed.jpeg&w=3840&q=75)
Step by step
Solved in 2 steps with 1 images
