Balance Sheet Balance Sheet Year 1 Year 2 Prepare the balance sheet for the business as of December 31 for Year 1. Hint: Report only total equity on the balance sheet and remember that total equity equals the difference between assets and liabilities. Total assets Assets Show Transcribed Text Balance Sheet Balance Sheet Year 1 Year 2 Total assets $ Assets NETTLE DISTRIBUTION Balance Sheet December 31, Year 1 Total liabilities 0 $ $ 0 0 Balance Sheet Year 2 >
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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Problem 2-5A (Algo) Computing net income from equity analysis, preparing a balance sheet, and
computing the debt ratio LO A2, P1
[The following information applies to the questions displayed below.)]
The accounting records of Nettle Distribution show the following assets and liabilities as of December 31 for Year 1 and
Year 2.
December 31
Cash
Accounts receivable
office supplies
office equipment
Trucks
Building:
Land
Accounts payable.
Note payable
year 1
$ 44,178
23,980
3,783
116,120
45,439
Problem 2-5A (Algo) Part 1
0
0
63,045
0
Year 2
$ 6,832
18,801
2,771
123,689
54,439
151,475
37,799
31,269
89,274
Required:
1. Prepare balance sheets for the business as of December 31 for Year 1 and for Year 2. Hint: Report only total equity on the balance
sheet and remember that total equity equals the difference between assets and liabilities.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd3c134ff-b7ac-4f59-841d-6bdd50fc3944%2Fd3294abd-519d-4285-b391-fd078ebdf46d%2Foximosv_processed.jpeg&w=3840&q=75)
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