Compute the total increase (or decrease) for the Home Office account balances on December 31, 2021.
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.
Compute the total increase (or decrease) for the Home Office account balances on December 31, 2021.
![Selected balances from ABC Co's Branch A and Branch B are:
A Branch
B Branch
Beginning Inventory
Petty Cash Fund
Ending Inventory
Accounts Receivable, Beginning
19,200
21,000
2,000
19,000
1,500
12,000
43,500
55,000
Shipment from Home Office
Accounts Receivable, End
Cash Collections
Sales
Cash Expenses
47,000
61,000
53,300
70,000
70,000
80,000
85,000
100,000
14,300
21,000
All sales, collections, and expenses are handled at the branch. All cash received from sales and collections are sent
directly to the Home Office. Expenses are paid by the branch from the imprest fund and immediately reimbursed by
the Home Office and credited to the Home Office account. All expenses paid by the branch are recorded in the
books of the branch. Compute the TOTAL increase or (decrease) for the Home Office account balances on
December 31, 2021.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F099bc0eb-aea8-4a49-9c37-1c096004b1fd%2F273342e6-ee31-474f-9413-50c01ee087d7%2F1qmst3v_processed.jpeg&w=3840&q=75)
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