Jassim Contracting Company started its work on May 1, 2017, and the following operations took place during the month of May 2017: -1 -2 -3 -4 -5 -6 -7-8 Jassim invested $ 12,000 in cash in the company. Equipment was purchased on the account at an amount $ 1,800. $ 360 was paid for the company's fire insurance for a year. Buy stationery for $ 600 in cash. Buying a car for $ 7,500, paying $ 1,500 of it, and the rest on the account, paying $ 720 for the rent for the month of May. Pay $ 170 for the electricity fee. Sending invoices to the company's customers in the amount of $ 8500 for the services provided to them. Paying $ 800 of the equipment purchased. Receive an invoice for advertisements submitted to the company in the amount of $ 160. Paying the salaries of workers $ 1,250. Collecting $ 2000 from accounts receivable. Jasim withdraws $ 500 for his personal use. The stationery was inventoried at the end of the month, the remaining $ 350 was found. The insurance for the month of May was confirmed. Required / -9 -10 -11 -12 -13 -14 -15 3 1- Recording the above operations in the general journal's register 2- Posting the entries to the general ledger register. 3- Balance the accounts and prepare the trial balance 4- Preparing the income statement for the month of May 5- Preparing the balance sheet for the month of May.
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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