bleting E4-16 Preparing the financial statements The adjusted trial balance for Green Advertising Services is presented below: Lea GREEN ADVERTISING SERVICES Adjusted Trial Balance December 31, 2018 2. E Account Title Balance Debit Cash Credit $ 14,000 Accounts Receivable 15,800 Office Supplies 6,500 Land 18,400 Building 47,900 Accumulated Depreciation-Building $ 36,100 Furniture 19,600 Accumulated Depreciation-Furniture 14,100 Accounts Payable 10,600 Salaries Payable 7,200 Unearned Revenue 16,000 Green, Capital 61,400 Green, Withdrawals 18,300 Service Revenue 49,800 Salaries Expense 28,600 Supplies Expense 8,400 Depreciation Expense-Building 2,900 Depreciation Expense-Furniture 1,300 Advertising Expense 13,500 $ 195,200 $ 195,200 Total Requirements 1. Prepare the income statement for the year ending December 31, 2018. 2. Prepare the statement of owner's equity for the year ending December 31, 2018. year. Assume that there were no contributions made by the owner during the 3. Prepare the classified balance sheet as of December 31, 2018. Use the report form.
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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