Chippy Ltd - Statements of financial position as at 31 July 2022 2021 £000 £000 ASSETS Non-current assets Property, plant and equipment Current assets Inventories Trade and other receivables Cash and cash equivalents Total assets EQUITY AND LIABILITIES Equity Ordinary share capital Share premium Retained earnings Total equity Non-current liabilities Bank loans Current liabilities Trade payables Tax liabilities Total liabilities Total equity and liabilities 200,388 14,258 11,866 138,897 55,692 365,409 126,081 15,000 179,862 329,943 30,000 30,000 13,116 1,350 14,466 44,466 365,409 183,721 8,196 6,475 74,700 89,371 273,092 83,200 11,000 143,992 238,192 22,000 22,000 11,800 1,100 12,900 34,900 273,092 Further information: The total depreciation charge for the year was £12,200,000. Property, plant and equipment with a carrying amount of £900,000 was sold in the year. All sales and purchases were on credit. Other expenses were paid for in cash. A dividend of £9,100,000 was paid during the year.
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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