5. The following trial balance was extracted from the books of Fasuha Trading as at 31 December 2020. Particulars Debit Credit RM RM Office equipment Motor vehicles Furniture Accumulated depreciation as at 1 January 2020: Office equipment Motor vehicles Fumiture Account receivables and account payables Capital 6% loan to Rara Purchases and sales Discount Advertising Cash in hand Provision for doubtful debts Commission received 6% loan from Afina Bank (taken from 1 May 2020) Rent Drawings Maintenance and petrol Staffs wages Insurance Cash at bank Carriage inwards Camiage outwards Telephone and electricity Duties on purchases Returns Inventory as at 1 January 2020 12,250 9.150 3.600 2.450 1,373 1,060 3,632 29,608 6.860 2,500 19,110 31,560 215 4.250 175 1.630 300 740 8.000 700 1,200 1,900 1.260 4,005 1.000 5,270 210 250 610 915 110 112 3,415 79,710 79,710 TOTAL The following adjustment are to be taken into account: a Inventory as at 31 December 2020 was valued at RM2,600 b. The interest on the loan taken froma C. Prepaid RM300 of the insurance premiums d. Prepaid RM125 of the telephone and electricity bills. e. Depreciation was provided using the rates as follows: L Office equipment L Motor vehicles . Fumiture 1. Bad debts of RM110 to be written att m Afina bank was not recorded in the accounts. 20% p.a on carrying value 15% pa on cost 10% pa on cost 9 The provision for doubtul debts was to be adjusted to 25% of the remaining h. Fasuha had drawn RM150 canh from the business to spend on his son's birthday. account receivables Required: a) Prepare the Statement Prafit or Loss and Other Comprehensive income for the year ended 31 December 2020. b) Prepare the Statement of Financial Position 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.
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