Adjusted Trial Balance December 31, 2021 Accounts Debit Credit Accounts Payable 2,800 Accumulated Depreciation $,000 Advertising Expense 1,000 Cash 64,200 Common Stock 20,000 Depreciation Expense 8,000 Dividends 4,000 Equipment 40,000 Insurance Expense 2,400 Interest Expense 750 Interest Payable 750 Legal Fees Expense 1,500 Miscellaneous Expense 1,200 Notes Payable 30,000 Prepaid Insurance 2,400 Prepaid Rent 1,600 Rent Expense s0 Retained Earnings Salaries Expense 2,000 Service Revenue 72,900 Supplies (Office) 500 Supplies Expense (Office) 4,100 Totals $134,450 $134,450
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.
Great Adventures, Inc. began their business on July 1, 2021. Using the adjusted
![Great Adventures, Inc.
Adjusted Trial Balance
December 31, 2021
Accounts
Debit
Credit
Accounts Payable
2,800
Accumulated Depreciation
8,000
Advertising Expense
1,000
Cash
64.200
Common Stock
20,000
Depreciation Expense
8,000
Dividends
4,000
Equipment
40,000
Insurance Expense
2,400
Interest Expense
750
Interest Payable
750
Legal Fees Expense
1,500
Miscellaneous Expense
1,200
Notes Payable
30,000
Prepaid Insurance
2,400
Prepaid Rent
1,600
Rent Expense
800
Retained Earnings
Salaries Expense
2,000
Service Revenue
72,900
Supplies (Office)
500
Supplies Expense (Office)
4,100
Totals
$134,450
$134,450](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F652eda4a-07c7-446c-baaa-e1ffddd9731f%2Fdbd11380-5983-41dc-91e1-a987a2cf3107%2F5c85w4v_processed.png&w=3840&q=75)
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