Assets Cash Accounts Receivable Merchandise Inventory Total Current Assets Land Equipment Accumulated Depreciation Total Assets Liabilities Current Liabilities Accounts Payable Taxes Payable Total Current Liabilities Bonds Payable Total Liabilities Shareholders' Equity Common Shares Retained Earnings Zooyo Appliance Balance Sheet As at December 31 Total Shareholders' Equity Total Liabilities and Shareholders' Equity Sales Cost of Goods Sold Gross Profit Operating Expenses Depreciation Expense Other Operating Expenses Total Operating Expenses Income from Operations Other Income and Expenses 2020 Interest Expense Loss on Sale of Equipment Income before Income Tax Expense Income Tax Expense Net Income (Loss) $37,580 17,000 21.000 75,580 Zooyo Appliance Income Statement For the Year Ended December 31, 2020 Notes "There was no sale of land or purchase of equipment during the year. The company did not repay any bonds principal during the year. The company declared and paid dividends during the year. 2019 110,000 130,000 (26.500) (30.000) $289.080 $268.000 75,000 87.080 162,080 $289.080 $29,000 $35,000 18.000 18.000 47,000 53,000 80.000 65.000 127,000 118,000 $15,000 16,000 27,000 58,000 80,000 160,000 70,000 80.000 150.000 $268.000 $142,000 92,000 50,000 4,500 13,550 18,050 31,950 (4,350) (3,200) 24,400 7.320 $17.080
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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