ABFA1173 Principles of Accounting Statements of Financial Position as at 31 December. Year 1 Question 3 Year 2 The summarised accounts of Hope Sdn Bhd for Year 1 and Year 2 are given below: RM'000 RM'000 RM'000 RM'000 110 Non-current assets (NBV) 140 Statement of Profit or Loss for the years ended 31 December.. Year 2 Inventories Trade receivables Bank 20 25 30 28 Year 1 RM 000 RM'000 RM'000 RMro00 45 155 63 Sales 200 280 203 Less: Cost of goods sold Gross profit Less: Expenses: Administration expenses Debenture interest (150) 50 (210) 70 Ordinary share capital Retained profits 100 30 130 100 41 38 46 141 |(38) 12 4 (50) 20 Net profit before tax Less: Tax expense Net profit after tax Trade payables Bank 15 10 12 (3) (4) 16 25 12 8% Debentures 50 Statement of Changes in Equity (extract) for the years ended 31 December. Year 2 155 203 Year 1 RM'000 RM'000 Inventories as at 1 January Year 1 was RM50,000. Retained earnings as at 1 Jan Add: Profit for the year Less: Appropriation Ord div of 5 sen per share Retained earnings as at 31 Dec 26 9 30 16 Required: (5) 30 (5) 41 (a) Calculate the following ratios for Year 1 and Year 2: (iv) Trade receivables turnover days; (M) Trade payables turmover days; (vil Current ratio
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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