6. Mr. Sarif began its operations on January 1, 2015. The trial balance for Sarif at 31" March is as follows: For the Quarter ended 31" March, 2015 Account Titles Debit TK Mr. Sarif Trial Balance Cash Accounts Receivable Supplies Office Equipment Accumulated Depreciation Notes payable Accounts Payable Interest Payable Sarif's Capital Sarif's Drawings Service Revenue Salaries expense Purchase Transportation expense Unearned Revenue Advertising Expense Showroom Expense Prepaid Insurance Miscellaneous expense. 13600. 15400 1500 34000 Requirements: i) Prepare a complete work sheet. 10000 4000 26000 2500 2800 800 4800 12000 1,27,400 Credit TK Adjustments: a) Insurance expires at the rate of TK 500 per month b) Depreciation is TK. 1000 per month c) A physical count reveals that supplies on hand 500 taka. d) Interest accrued on 6-month note payable, at the rate of 10% e) Unearned revenue earned during the year is taka 1900. f) Service Provided but unbilled at Dec 31 total TK 750 g) Salaries expense is for one year period starting from Jan. 1 2010. h) Create a provision for tax 25%. 8000 16000 9000 500 25000 65900 3000 1,27,400 ii) Journalize the closing entry on the basis of work sheet.
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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