Comparative financial statements for Weaver Company follow: Weaver Company Comparative Balance Sheet at December 31 This Last Year Year Assets Cash $ 10 $ 12 Accounts receivable 295 229 Inventory 150 194 Prepaid expenses 6 Total current assetS 464 441 Property, plant, and equipment Less accumulated depreciation 509 431 (80) (70) 361 Net property, plant, and equipment Long-term investments 429 28 34 Total assets $ 921 $836 Liabilities and Stockholders' Equity Accounts payable $ 304 $226 Accrued liabilities 70 80 Income taxxes payable 71 65
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.
![Comparative financial statements for Weaver Company follow:
Weaver Company
Comparative Balance Sheet
at December 31
This
Last Year
Year
Assets
Cash
10
$ 12
Accounts receivable
295
229
Inventory
150
194
Prepaid expenses
Total current assetS
464
441
Property, plant, and equipment
Less accumulated depreciation
509
431
(80)
(70)
Net property, plant, and equipment
429
361
Long-term investments
28
34
Total assets
$ 921
$836
Liabilities and Stockholders' Equity
Accounts payable
$ 304
$226
Accrued liabilities
70
80
Income taxes payable
71
65
Total current liabilities
445
371
Bonds payable
198
171
Total liabilities
643
542
Common stock
161
201
Retained earnings
117
93
Total stockholders' equity
278
294
Total liabilities and stockholders' equity
$ 921
$836
Weaver Company
Income Statement
For This Year Ended December 31
Sales
$752
447
Cost of goods sold
Gross margin
305
223
Selling and administrative expenses
Net operating income
Nonoperating items:
Gain on sale of investments
Loss on sale of equipment
82
$ 7
(2)
5
Income before taxes
87
Income taxes
23
Net income
$ 64](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd2df96a6-8b0b-4649-bea8-9287c8ec5504%2F146498ec-8c04-44a4-8e32-2b93d4c61de4%2Fh3vhcc_processed.png&w=3840&q=75)
![During this year, Weaver sold some equipment for $18 that had cost $30 and on which there was accumulated
depreciation of $10. In addition, the company sold long-term investments for $13 that had cost $6 when purchased several
years ago. Weaver paid a cash dividend this year and the company repurchased $40 of its own stock. This year Weaver
did not retire any bonds.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd2df96a6-8b0b-4649-bea8-9287c8ec5504%2F146498ec-8c04-44a4-8e32-2b93d4c61de4%2Fhdkreuj_processed.png&w=3840&q=75)
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