BUSINESS TRANSACTION The following are the business transaction of Gin Heng Electrical Sdn. Bhd in September 2020: Date Transaction Document 01/09/2020 Invested the business with RM20,000 of capital into Bank in Slip Maybank and RM6,000 as cash in hand. 02/09/2020 Bought office equipment for business use by cash Receipt RM1,500. 03/09/2020 20 units of Penasonex air conditioner are bought on Purchase Invoice credit from Suzie for RM20,000. 04/09/2020 Eric withdrew cash amount RM500 for personal use. Receipt 05/09/2020 Purchased 20 units of Khund electrical kettle from Purchase Invoice Juliana that costs RM100 for each. 06/09/2020 Sold 16 units of Penasonex air conditioner on credit to Sales Invoice Econez with amount of RM24,000. 09/09/2020 Return 4 units of damaged Khund electrical kettle to Debit Note Juliana. The total amount is RM400. 10/09/2020 Sold 14 units of Khund electrical kettle on credit for Sales Invoice RM2,100 to Victor. 11/09/2020 Gin Heng Sdn. Bhd settled 80% of its account with Suzie Cheque by cheque RM12,960, less 10% discount. 12/09/2020 Return 3 units of Penasonex air conditioner from Econez Credit Note with amount RM4,500. 13/09/2020 Paid utilities of RM1,600 by cash. Payment Voucher 14/09/2020 Received cash RM8,500 from Econez. Receipt 15/09/2020 Paid rent expenses to Mr. Chong with RM1,400 by Cheque cheque. 16/09/2020 Gin Heng Sdn.Bhd settled its account with Juliana by Receipt cash RM7,600. 19/09/2020 Received sales commission of RM600 by cash. Receipt 20/09/2020 Withdrew RM1,000 from RHB Bank for business use, in Transaction Slip exchange of cash in hand.
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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