Direction: Identify the following items by writing your answer on the space provided. 1. Learning is Fun Company had current assets amounting to Php 100,000. Noncurrent assets for the year totaled Php 76,000. How much is the company's total assets? 2. Happy Selling Company's total liabilities amounted Php 10,000. Total equity had an ending balance of Php 20,000. How much is total assets? 3. At the end of the first month of operations for Juan's Service Company, the business had the following accounts: Cash, Php19,000; Prepaid Rent, Php500; Equipment, Php5,000 and Accounts Payable Php2,000. By the end of the month, Jackson's had earned Php20,000 of Revenues, Php1,000 of Utilities Expenses and Php1,500 of Salaries Expense. Calculate the net income to be reported by the company for this first month. _4. Owner, Juan invested an initial capital amounting P50,000 in order to put up his janitorial services company. During the first year of operations (2016), the company had loss of P25,000. Because of this, Juan invested additional capital amounting to P50,000 in 2017. In the second year (2017), the company had a net income of P100,000 and Juan withdrew P10,000 for personal use. Compute for the ending capital balance of Juan for the year 2017. 5. Owner Juana invested P100,000 to start her laundry business. During the first year of operations (2016), the company had a net income of P15,000. Juana invested additional P100,000 to grow the business. In 2017, the business earned P50,000. As of December 31, 2017, Juan's capital balance is P200,000. How much is Juana's withdrawal?
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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