An examination of the cash activities during the year shows the following. GREAT ADVENTURES Cash Account Records July 1, 2024, to December 31, 2024 Cash Receipts Cash Disbursements Date Description Amount Date Check number Description Amount 7/1 Stock sale $20,000 7/1 101 Insurance $5,160 7/15 Clinic receipts 2,000 7/2 102 Legal fees 1,650 7/22 Clinic receipts 2,300 7/7 DC Advertising 330 7/30 Clinic receipts 4,000 7/8 103 Bikes 11,500 8/1 Borrowing 33,000 7/24 DC Advertising 730 8/10 Clinic receipts 3,000 8/4 104 Kayaks 32,200 8/17 Clinic receipts 10,500 8/24 DC Office supplies 1,830 9/21 Clinic receipts 13,500 9/1 105 Rent 2,760 10/17 Clinic receipts 18,200 12/8 106 Race permit 1,230 12/15 Race receipts 20,000 12/16 107 Salary 2,000 12/31 108 Dividend 2,000 12/31 109 Dividend 2,000 $126,500 $63,390
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.
An examination of the cash activities during the year shows the following.
| GREAT ADVENTURES | ||||||
| Cash Account Records | ||||||
| July 1, 2024, to December 31, 2024 | ||||||
| Cash Receipts | Cash Disbursements | |||||
|---|---|---|---|---|---|---|
| Date | Description | Amount | Date | Check number | Description | Amount |
| 7/1 | Stock sale | $20,000 | 7/1 | 101 | Insurance | $5,160 |
| 7/15 | Clinic receipts | 2,000 | 7/2 | 102 | Legal fees | 1,650 |
| 7/22 | Clinic receipts | 2,300 | 7/7 | DC | Advertising | 330 |
| 7/30 | Clinic receipts | 4,000 | 7/8 | 103 | Bikes | 11,500 |
| 8/1 | Borrowing | 33,000 | 7/24 | DC | Advertising | 730 |
| 8/10 | Clinic receipts | 3,000 | 8/4 | 104 | Kayaks | 32,200 |
| 8/17 | Clinic receipts | 10,500 | 8/24 | DC | Office supplies | 1,830 |
| 9/21 | Clinic receipts | 13,500 | 9/1 | 105 | Rent | 2,760 |
| 10/17 | Clinic receipts | 18,200 | 12/8 | 106 | Race permit | 1,230 |
| 12/15 | Race receipts | 20,000 | 12/16 | 107 | Salary | 2,000 |
| 12/31 | 108 | Dividend | 2,000 | |||
| 12/31 | 109 | Dividend | 2,000 | |||
| $126,500 | $63,390 |
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